How to Get Your Mortgage Approved When You Are Self-Employed | 2025

Updated ·2 min read Expert verified
Written by Calbrea
Reviewed by Tunita Bailey

Do you get paid as a 1099 contractor or own a business? Find out what you can do to make owning a home happen this year.

What's Actually Working for Self-Employed Homebuyers in 2025

A Success Story:

"We just helped a 1099 contractor close on their first home. The key? They used bank statements to show consistent deposits. Having great credit isn’t enough as a business owner. It's all about presenting your income the right way." - Tunita Bailey, Mortgage Broker specializing in getting entrepreneur's financing

» Get Free Access Now: Self-Employed Homebuying Guide: Checklists and timelines

💡Tip: If you own a business, you should be paying yourself a salary through payroll. That way, you can produce a W2 when lenders ask for proof of income.

Here are some practical tips to help you on the path to homeownership:

  • Bank statement loans exist specifically for business owners. Find lenders experienced with providing mortgages to business owners.
  • You can often add someone to your loan application (called a co-borrower) to increase your chances of getting approved.
  • Get pre-approved before house hunting.
  • Save extra for your down payment, closing costs, and cash reserves.

How to Make Your Income Qualify When Self-employed

Smart documentation is key:

  • Use Schedule C for clear profit tracking
  • Keep business and personal expenses separate
  • Track mileage and expenses meticulously

💡Tip: Writing off too many expenses on your tax return (to show a business loss) can sometimes sabotage your approval. Consult with a lender before you file your taxes, if possible.

Some lenders will average your best 12 months instead of 24! This means that if you've had an exceptionally profitable year recently, you can use that to your advantage when applying for a mortgage. It's a great way to boost your income profile and increase your chances of getting approved.

Did you know? Some credit unions have special programs designed specifically for business owners just like you.

» MORE: See how much home your 1099 income can afford with our Mortgage Calculator

The Two-Year Rule (And How to Work Around It)

Most lenders want two years of self-employed income history. But here's the secret: If you have a strong previous work history in the same field, some lenders will accept one year. Even better? Some will count your current work plus past W2 work in the same industry.

The Bottom Line

The rules for self-employed buyers are different, but being self-employed doesn't lock you out of homeownership. You might actually have more options than you think.

» NEXT: Ready to make it happen? The Self-Employed Homebuyer Guide breaks down every step!