Self-Employed? You Can Still Buy a Home

Being self-employed has perks — but when it comes to getting a mortgage, it can feel like an uphill battle. Good news: There are options designed specifically for entrepreneurs and business owners.

The Freddie Mac 5-Year Rule

Here’s something many borrowers don’t know about:

If you’ve been in business for 5+ years, Freddie Mac may only require 1 year of tax returns instead of 2.

This is a game-changer for established business owners who had a slower first year or are investing heavily in growth.

How It Works:

Why This Matters

Many self-employed borrowers have legitimate income but show lower earnings on paper due to:

• Business deductions — Write-offs reduce taxable income
• Reinvested profits — Money put back into the business
• Startup phase — Early years may show losses

The Freddie Mac 5-year rule recognizes that a single slow year doesn’t define a healthy, established business.

Qualifying for This Program

To use the 1-year option, you typically need:

• ✅ 5+ years in the same business (verified via tax returns, business licenses, etc.)
• ✅ 1 year of self-employment income on federal tax returns
• ✅ Profitable in the most recent year (or explainable loss)
• ✅ Good credit — Generally 620+, higher scores get better rates

Other Self-Employed Options

If you don’t qualify for the Freddie 5-year program, there are other paths:

Bank Statement Loans

• Use 12-24 months of business or personal bank statements instead of tax returns
• Lenders calculate income from deposits
• Great for high earners with low documented income

Asset-Based Qualification

• Asset depletion — Use savings/investments to qualify
• No income verification — Some programs skip income entirely

Non-QM Programs

• Bank statement programs
• P&L (Profit & Loss) statements with CPA verification
• DSCR for investment properties (more on this below)

Investment Properties: No Income Verification?

If you’re looking at investment properties, there’s an option that doesn’t require proving income at all:

DSCR Loans (Debt Service Coverage Ratio)

DSCR loans qualify you based on the property’s cash flow — not your personal income.

• ✅ No W-2s, tax returns, or pay stubs needed
• ✅ Based on rental income potential
• ✅ Great for investors with multiple properties or high deductions

How DSCR Works:

DSCR = Net Operating Income / Debt Service

If the property rents for more than the mortgage payment, you qualify. Simple.

Typical DSCR Requirements:

• Credit: 620-700+ (varies by lender)
• Down payment: 20-30% for investment properties
• DSCR ratio: Usually 1.0+ (some go as low as 0.75)
• Property types: Single-family, multi-family, condos

Ready to Explore Your Options?

Whether you’re self-employed with 5+ years in business, or looking at investment properties, there are more paths to homeownership than you might think.

Get Pre-Qualified →

Mention you’re self-employed when you fill out the form, and we’ll match you with the right program.