Getting a Mortgage When You’re Self-Employed

Self-employed buyers are some of the most financially capable people in the mortgage market — and yet they often face more obstacles getting approved than W-2 employees. Why? Because traditional mortgage underwriting is built around consistent, documented income. Business owners, freelancers, contractors, and entrepreneurs often show lower taxable income on paper due to legitimate deductions — making it harder to qualify using standard guidelines.

The good news: there are loan programs specifically designed for self-employed borrowers in Scottsdale and throughout Arizona. Mark Merry at Granite Bank specializes in finding the right solution.

Traditional Self-Employed Mortgage Qualification

For conventional, FHA, and VA loans, self-employed borrowers typically need:

• Two years of personal and business tax returns

• A year-to-date profit and loss statement

• Business bank statements

• CPA letter confirming business is active and in good standing

• Two-year self-employment history in the same industry

Income is calculated by averaging the net income (after business write-offs) over two years. If your write-offs significantly reduce your taxable income, this may limit your qualifying amount — even if your actual cash flow is strong.

Bank Statement Loans for Self-Employed Buyers

Bank statement loans are a game-changer for many self-employed borrowers. Instead of using tax returns to verify income, these loans use 12 or 24 months of bank statements to calculate your cash flow.

How it works:

• Provide 12 or 24 months of personal or business bank statements

• Lender calculates average monthly deposits (with a business expense ratio applied for business accounts)

• Resulting income figure is used to qualify — not tax return income

Bank statement loans typically require:

• Credit score of 680–700+

• Down payment of 10%–20%

• Rates slightly higher than conventional — but often still very competitive

• Two years of self-employment history

Asset Depletion Loans in Scottsdale

For Scottsdale buyers with significant investment portfolios but limited traditional income — retired entrepreneurs, investors, executives with deferred compensation — asset depletion loans offer another path.

The lender takes your total eligible assets, divides them by the loan term (in months), and uses the result as a monthly income figure for qualifying purposes. This can dramatically increase your qualifying income without requiring you to actually draw down your portfolio.

Tips for Self-Employed Buyers in Scottsdale

If you’re self-employed and planning to buy in Scottsdale, here’s what Mark recommends:

• Talk to your CPA before applying — sometimes adjusting your write-off strategy in the prior year can significantly improve qualifying income

• Separate business and personal finances clearly

• Maintain clean bank records — commingled deposits or irregular transfers can complicate underwriting

• Get pre-approved early — self-employed applications sometimes take longer due to additional documentation

• Don’t open new business credit lines or make major financial changes during the application process

Work With a Self-Employed Mortgage Specialist

Mark Merry has structured loans for business owners, entrepreneurs, contractors, and freelancers throughout his 30+ year career. He understands the challenges and knows which programs and lenders are most self-employment-friendly.

Call (480) 442-7487 for a candid conversation about your self-employed mortgage options in Scottsdale.