Allen Markel, REALTOR® · Texas Premier Realty

Can I Even Buy?

Buying a Home When You're Self-Employed or 1099

You make good money. The problem is that a lender reads your tax return, not your bank balance — and your tax return was written to minimize income, which it did, successfully. Qualifying income is generally what's left after your deductions, so every write-off that cut your tax bill also cut what a lender is allowed to count. That isn't a mistake; it's the system working exactly as designed, in a direction that happens to work against you here. Raised a year before you buy, with your CPA and a lender in the same conversation, it's a strategy. Raised a month before, it's a problem.

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The honest fit

Best for

  • Business owners, contractors, freelancers, and commission-only earners
  • Anyone who's been told they "don't make enough" while sitting on a healthy bank account
  • Buyers whose income is real and steady but doesn't fit a W-2 shaped box

Maybe not if…

  • You've been self-employed only a few months with no prior history in the same line of work
  • Your business income is genuinely declining year over year — that's a real underwriting problem, not a paperwork one

The process

How it works

  1. 01

    We name the actual obstacle first: is it documentation, or is it the income itself? They have completely different fixes.

  2. 02

    You talk to a lender who writes self-employed loans regularly, not one who does it occasionally.

  3. 03

    We look at every path — conventional with two years of returns, and bank-statement and other non-QM options if returns won't tell the true story.

  4. 04

    We shop with a real number, because a pre-approval built on the wrong income figure falls apart at the worst moment.

The trade

What you get — and what to weigh

What you get

  • A lender who has seen your situation many times before
  • An honest read on whether waiting one more tax year materially improves your position
  • Multiple financing paths compared side by side instead of one rejection

The trade-offs (straight talk)

  • Loans written off bank statements rather than tax returns typically carry higher rates and larger down payments
  • The write-offs that lower your tax bill also lower your qualifying income — you may not get both
  • Expect to document more than a W-2 buyer, not less

“The most common thing I hear is that somebody was told no by one lender and stopped. One lender's no is one underwriting box, not a verdict on you. I'm not a lender and I won't pretend to underwrite you — what I'll do is put you in front of people who write these loans every week and let them tell you where you actually stand.”

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Questions, answered

Frequently asked questions

Because qualifying income is generally based on what's left after your business deductions, not your gross receipts or your deposits. Every write-off that reduces your taxes also reduces the income a lender can count. That's not a mistake — it's the system working as designed, in a direction that happens to work against you here. Knowing it in advance lets you plan the year before you buy.

Let's find out where you actually stand

One conversation with a lender who writes these regularly usually beats months of guessing.I'll make the introduction.

Call (832) 709-2540

Not sure this is the right path? Let's figure it out together.

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Allen Markel, REALTOR® · Texas Premier Realty · TREC #0658294

Questions about Self Employed Buyer

What it is

  • Why is buying harder when you are self-employed?

    A lender reads your tax return, not your bank balance. Your return was written to reduce taxable earnings, so what a lender may count is what is left after deductions. The problem is usually how the lender measures your earnings, not how much you make.

  • What counts as self-employed to a mortgage lender?

    Generally business owners, contractors, freelancers and commission-only earners, anyone paid on a 1099 rather than a W-2. Lenders handle them differently from salaried buyers, and some specialize in it. A lender who writes these loans regularly can tell you how you are viewed.

  • What is a non-QM loan?

    It is a loan that does not follow standard qualifying rules, such as one that looks at bank-statement deposits instead of tax returns. It can help when returns do not show your true earnings. These loans typically carry higher rates and larger down payments.

  • What is a bank-statement loan?

    A loan program that looks at deposits in your bank statements, rather than tax returns, to estimate what you earn. It can suit someone whose write-offs lower the return. Rates and down payments are usually higher, and which program fits is a lender's call.

  • Is the issue my documents or my earnings themselves?

    They are different problems with different fixes. A documentation problem can often be solved with the right loan program. A true earnings problem, such as a decline, is a real underwriting issue. Naming which one you face is the first step.

Who it fits

  • Who does this page help?

    Business owners, contractors, freelancers and commission-only earners, plus anyone told they do not make enough while holding a healthy bank account. It fits buyers whose earnings are real and steady but do not fit a W-2 shaped box.

  • What if I have only been self-employed a short time?

    If you have only been self-employed a few months with no prior history in the same line of work, it is harder. Some situations allow a shorter history, especially if you are doing similar work as before. A lender decides. Talk to us to find the right timing.

  • What if my business earnings are dropping?

    If earnings are declining year over year, that is a real underwriting problem, not a paperwork one. A lender weighs the trend, not just one year. It may make sense to wait and stabilize before applying. We can talk through the options with you.

  • I am a W-2 employee who also has a side business. How does that count?

    A lender may treat each source separately, and side earnings often need a history before they count. What helps is documenting both clearly. A lender who regularly handles mixed situations can tell you what applies to you.

  • Does this apply to commission-only or gig workers?

    Commission earners and gig workers are often treated like other self-employed buyers, with a lender looking at history and consistency. Documentation requirements are heavier than for a salaried buyer. A lender can explain what applies.

How it works

  • What are the steps for a self-employed buyer?

    We name the actual obstacle first, then you talk to a lender who writes self-employed loans regularly. We look at every path, from conventional with returns to bank-statement options, and shop with a real number so the pre-approval holds up.

  • Why does it matter that the lender writes these loans often?

    A lender who sees self-employed files regularly knows what documents they need and which programs fit, and may spot options others miss. One who does it occasionally may decline a file that another would approve. Experience tends to save time.

  • What documents will I need?

    Expect more than a salaried buyer would provide. Typically returns, bank statements and business records, though it depends on the program. A lender will give you an exact list. Having them organized early makes things go faster.

  • How long should I be self-employed before applying?

    For most conventional loans, two years of history is the general expectation, though some situations allow a shorter time, especially if you did similar work before. Ask a lender where you stand rather than assuming you have to wait.

  • Why would a pre-approval fall apart?

    A pre-approval built on the wrong earnings figure can collapse at the worst moment, such as during underwriting. That is why we shop with a real number from a lender who has looked at your documents, not an optimistic estimate.

  • Should my CPA be part of this?

    It often helps. A lender and your CPA can discuss how returns are prepared and how that affects what you can qualify for. This is a conversation for them, not for us. We can help coordinate the timing.

  • How long does it take to find out where I stand?

    A conversation with a lender who writes these loans can give you an early read fairly quickly. What takes longer is any preparation, like adjusting how earnings are shown. That depends on your situation and lead time.

Costs to weigh

  • Will I pay more because I am self-employed?

    It depends on which loan fits. A conventional loan with returns is priced like others, while bank-statement and other non-QM loans typically carry higher rates and larger down payments. A lender can show both so you compare real numbers.

  • Can I have big write-offs and still qualify for a bigger loan?

    You may not get both. The write-offs that lower your tax bill also lower the earnings a lender can count. It is a trade-off to discuss with your CPA and a lender together. Planning a year ahead gives you the most options.

  • Is a larger down payment expected with a bank-statement loan?

    Typically yes. These loans often ask for more down than a standard one. The exact amount varies by program and lender. Compare it with waiting a year to qualify conventionally. Talk to us to find the right option for your circumstances.

  • Is it worth waiting one more tax year to buy?

    Sometimes. Another year of returns can improve your position, but it also means more time renting and possible changes in the market. We give you an honest read on whether waiting materially helps. It depends on your numbers.

Offers and timing

  • When should I start preparing if I want to buy in a year or two?

    As early as possible. Changes to how earnings show up on a return only help if raised a year before you buy, not a month. Starting early gives you and your CPA time to plan. Putting it off limits your choices.

  • What if I was told no by one lender?

    One lender's no is one underwriting box, not a verdict on you. Another lender or loan program may view the same file differently. Many people stop after one decline. We introduce you to lenders who write these loans every week.

  • Should I show more earnings on my taxes before buying?

    That is a real trade-off and a conversation for your CPA and a lender, not for us. Showing more can raise what you qualify for but costs in taxes. It only works with lead time, so raise it a year ahead.

  • Can I shop for homes while I get my paperwork in order?

    Yes, as long as you know your real number first so you do not write an offer you cannot back. Touring helps you set goals. We plan the order so you are ready when you find the right home.

  • Does my pre-approval hold if my business changes mid-process?

    A change in your business or earnings during the process can affect financing, so it helps to avoid big changes until closing. Tell your lender about anything that shifts. We help you plan so nothing catches you off guard.

Property questions

  • Does the type of home matter for a non-QM loan?

    It can, since programs have rules about property type and condition. We check the home and the loan together so you are not steered to a house the financing cannot support. Details depend on the program.

Compared with other options

  • How does a self-employed loan compare with seller financing?

    A seller-financed purchase is negotiated with the seller and usually costs more than bank rates, with a balloon in many cases. A lender program for self-employed buyers may offer more predictable terms. We compare both on your situation.

  • Is a conventional loan better than a bank-statement loan?

    Conventional loans usually cost less when you qualify, but when returns understate your earnings, a bank-statement loan may be the route that works. It depends on your documents and goals. We compare them side by side so you can decide.

Getting started

  • What should I bring to a first conversation with a lender?

    Recent returns, bank statements, and a rough picture of your business and any debts. You do not need everything perfect. The lender tells you what else is required. Starting early gives you time to prepare.

  • What is the first step to find out where I stand?

    Have a conversation with a lender who writes self-employed loans regularly. We make the introduction. It usually beats months of guessing, and it shows whether your issue is documentation or earnings.

Money

  • How much do I need down if I am self-employed?

    It depends on the loan. Conventional can be as low as 3% down on programs such as HomeReady and Home Possible, though 5% or more is common. Jumbo and non-QM loans typically need 10%, 15%, 20% or more, set by each lender. Bank-statement loans usually ask for more. A loan originator can give you your numbers.

  • What closing costs should I plan for as a self-employed buyer?

    The same as any buyer: closing costs that generally run 2% to 5% of the purchase price, plus prepaid insurance and taxes. Some loan programs may ask for reserves in the bank, so ask a loan originator. Seller concessions and lender credits can help within program limits, and the lender can give you exact numbers.

Documents

  • What documents do I need that a salaried buyer does not?

    Expect more than a W-2 buyer: returns, business records and bank statements, and the lender may ask for others depending on the program. A loan originator who writes these loans regularly can give you a checklist. Starting early gives you time to prepare, so nothing is scrambled at the last minute.

  • How does a lender decide what my earnings are?

    For a conventional loan, lenders generally look at what is left after your business deductions over two years of returns. Other programs look at bank deposits. How the business is structured matters, so your CPA and a lender experienced with self-employed buyers can talk it through together.

Pre-approval

  • Is a pre-qualification enough when I am self-employed?

    Usually not. A pre-qualification is a quick estimate from what you say, and a pre-approval built on the wrong earnings figure can fall apart. Get a pre-approval from a lender who has looked at your documents, so you shop with a number that holds up when it counts.

  • Can moving money between business and personal accounts cause problems?

    It can make documentation harder, since a lender needs to see where deposits come from, and large unexplained deposits can raise questions. Tell your loan originator about unusual movements before they happen, and keep clear records, so the file tells a consistent story to underwriting.

The market

  • Will I pay a higher rate as a self-employed buyer?

    Not on every loan. Conventional loans usually cost less when you qualify, while bank-statement and other non-QM loans typically carry higher rates and larger down payments. Compare the options side by side with a loan originator, and ask your CPA how the year's returns affect each path.

  • What if I have been self-employed for less than two years?

    It depends on the lender and your history. A shorter history can sometimes work when you are doing the same work you did as an employee, but a few months with no prior history in the same line of work is harder. Ask a loan originator before you assume you have to wait.

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