1st Advantage Mortgage is a licensed mortgage broker and lender in Charlotte, NC. For self-employed buyers, the mortgage lenders that matter are the ones who read deposits and 1099s rather than only tax returns, and as a mortgage lender and broker we compare those lenders on every file.
Why self-employed buyers get declined
Almost always for the same reason: the tax return is doing its job. Write-offs that are legitimate and sensible at tax time reduce the net figure an underwriter reads as income. A borrower with a healthy business can look thin on paper, and a single institution with one set of guidelines has no way around it.
That is where a broker matters. The programs below all exist to qualify the same borrower a different way, and different wholesale lenders run them with different rules. On every self-employed file we check conventional first, because if two years of returns support the income it is usually the cheapest answer, then compare the alternatives if they do not.
Bank statement loans
A bank statement loan qualifies you on 12 or 24 months of business or personal deposits instead of tax returns. The lender calculates a monthly income from the deposits and approves on that. Down payments typically start around 10% and are more often 15% to 20%, credit scores typically start in the 620 to 660 range depending on the program, and reserves after closing are usual. Full detail on bank statement loans.
1099-only loans
A 1099-only loan qualifies contractors and commissioned earners on one or two years of 1099 forms rather than full returns. Income is calculated from the 1099 totals with an expense factor, which often produces a higher qualifying income than the net figure on a tax return. This is the program for people paid on 1099 who do not run a business bank account.
Asset depletion loans
An asset depletion loan turns liquid assets into qualifying income. The lender takes eligible assets, such as savings, brokerage accounts and retirement funds, divides them over a set number of months, and treats the result as monthly income. Business owners who have just sold, and buyers whose wealth sits in assets rather than a paycheck, qualify this way.
DSCR loans for investors
A DSCR loan qualifies an investment property on its own rental income rather than your personal income, with no tax returns at all. Down payments typically start at 20% to 25%, many programs allow closing in an LLC, and some lenders place no limit on the number of financed properties. Full detail on DSCR loans.
What a self-employed file actually needs
- Twelve or 24 months of bank statements, business or personal, depending on the program
- A year-to-date profit and loss statement for most bank statement programs
- Your business license or a CPA letter confirming self-employment
- Two years of 1099s if you are using a 1099-only program
- Recent asset statements if reserves or asset depletion are in play
- A credit report, which we pull once and use across every lender we quote
Self-employed lending in Charlotte
Charlotte has one of the fastest-growing populations of self-employed professionals and small business owners in the Southeast, and the metro’s rental market from Uptown to Fort Mill keeps drawing investors. Both groups are underserved by banks. We close these loans regularly across Mecklenburg, Gaston, Union, Cabarrus, Iredell and York counties, and we are licensed in North Carolina, South Carolina, Texas, Florida, Virginia and Pennsylvania.
Most non-QM programs start around 620, and pricing improves as scores rise. Programs vary by lender, which is the reason to compare them rather than take the first answer.