Self-employed Washington borrowers can qualify with full tax returns or, when write-offs shrink taxable income, with non-QM programs that use 12 or 24 months of bank statements, 1099s, a CPA-prepared profit-and-loss statement, or assets. A broker can compare these programs because each lender calculates income differently.
Income documentation options
- Full documentation: one or two years of personal and business returns, analyzed with add-backs like depreciation.
- Bank statements: 12 or 24 months of personal or business statements; lenders apply an expense factor to business deposits.
- 1099-only: for independent contractors, using 1099 income with an expense factor.
- Profit-and-loss: CPA or tax-preparer prepared P&L at some lenders.
- Asset depletion: qualifying income derived from liquid assets.
Non-QM programs usually carry higher rates and down payments than agency loans. Many borrowers use one to buy now and refinance later once tax returns show the income.
Common questions
How long do I need to be self-employed to get a mortgage?
Agency loans usually look for two years. Some lenders accept one year with prior experience in the same field. Non-QM programs vary.
Will a bank statement loan work if I write off a lot of expenses?
That's the main reason they exist. Income is calculated from deposits, not taxable income.