Self-Employed and Ready to Buy a Home? Here’s How Lenders Judge Your Hustle

So you’ve been out here grinding. LLC in the bio. Invoices flying. Taxes paid (hopefully). And now you’re ready to take that next big step: buying a home. Whether you’re aiming for that VA, FHA, USDA, or Conventional loan, there’s just one thing standing between you and the keys to your kingdom—your tax returns.

See, when you’re self-employed, lenders don’t care how many clients you’ve got, how many followers you have, or how fly your website is. They want the numbers. And not just any numbers—they want the NET. Not that gross revenue you brag about on Instagram, but the net income after all those write-offs. Yes, even the “emotional support office chair” and the gas from your “business trip” to Miami.

🧾 The Basics: How Lenders Crunch the Numbers

Here’s the play:

• Lenders usually average your net income over 2 years.
• If your most recent year is lower than the one before? They’re just using that lower number and dividing it by 12. Yep. Savage.
• In some cases, if your business has been active for at least two years, they may accept 1 year of tax returns. But don’t count on it without strong documentation like an LLC registration, DBA, or that beautiful IRS Schedule C.

In other words, they need to know you’ve got a track record longer than a one-hit wonder. If you just quit your job six months ago to start flipping furniture on TikTok full time, they’re probably gonna hit you with a polite “nah.”

📈 Profit & Loss Statements = Your Business Receipts

Besides tax returns, lenders also want to see your year-to-date profit and loss statement. This shows your current income situation and proves you didn’t fall off after filing last year’s taxes. It’s like showing you still got the juice even after the tour ended.

😬 What If Your Income Is Irregular?

Freelancers, creators, barbers, boutique owners, and ride-share MVPs—we see you. But lenders might see your income as… unpredictable. That’s not necessarily a deal-breaker, but if you don’t keep tight records, it can make things more complicated than your cousin’s tax return with five W-2s and a goat listed as a dependent.

And if your income doesn’t qualify you for the loan you want, don’t panic. We have backup plans:

• Bank Statement Loans – They look at your deposits instead of your tax returns.
• P&L Only Loans – Yes, sometimes lenders will roll with your profit and loss statement.
• CPA Letter – Your CPA can provide documentation of your income over a time period.
• Asset Depletion Loans – Got money sitting in the bank? That might help you qualify.
• 1099 Loans – Great for truck drivers or independent contractors.

⚠️ Just know these come with higher down payments and interest rates. Ain’t no discounts for mystery money.

🏠 Ready to Make It Happen?

Listen, being self-employed shouldn’t block you from owning a home. It just means you need the right person to help guide you through it—and that’s me. I’m Kory Small, a mortgage broker servicing Katy, TX, the Houston metro, and the entire state of Texas. I’ll help you sort through the numbers, show you your options, and get you ready for the home you deserve.

Click HERE so we can set up a real conversation, no pressure—just strategy.

And while you’re at it, check out my Home Affordability Calculator HERE to see how much house you might qualify for.