Self-Employed · 1099 · Business Owners

Mortgages for Self-Employed Borrowers in Florida

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Being self-employed does not by itself disqualify you from a mortgage. It changes how a lender measures your income, and returns prepared to take every deduction you are legally entitled to can make a healthy business look thin on paper. Homesite Mortgage is a broker, not a lender — we do not approve, fund or underwrite anything. What we do here is find which method of measuring income fits the way you actually earn, put the file in front of lenders whose guidelines use it, and say plainly if we do not find one.

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Different Institutions, Different Guidelines

A salaried borrower hands over a paystub and a W-2 and the income question is often largely answered. A business owner often hands over returns prepared, correctly and legally, to show as little taxable profit as possible.

Each institution works from its own products and its own way of calculating income, so a decline from one is that lender applying its own guidelines. In our experience it is frequently a program-fit problem rather than a verdict on your finances. Ask what specifically failed — the income calculation, your history, the debt ratio, the property — and tell us.

You fill out one application with us, we work from one credit report, and we shop the file to several lenders; if one needs its own pull, we tell you first. The lender makes the credit decision, not us — but we choose which lenders ever see the file.

How Agency Guidelines Measure Self-Employed Income

Start with who counts. Fannie Mae's Selling Guide treats an individual with a 25 percent or greater ownership interest in a business as self-employed. That takes in people who do not think of themselves that way — a minority partner in an LLC, or someone with a W-2 job and a side business.

On a full-documentation loan sold to Fannie Mae or Freddie Mac, qualifying income generally comes from the net income on your returns rather than from gross receipts. The guide has the lender work out how much of that income can be relied on, through a cash flow analysis. Certain non-cash deductions get added back, depreciation and amortization among them. Most ordinary business expenses do not.

Money in a business account is generally looked at as an asset, for down payment or reserves, rather than as income. Under Fannie Mae's guidelines, drawing on it can call for a separate look at whether the business can absorb the withdrawal.

Direction matters too. Agency guidelines have the lender consider whether income is stable, so a down year against the prior one generally has to be explained and can lower the figure used.

Write-Offs, and What to Do Before You File

Business expenses you deduct reduce the net income on your return, and net income is the figure agency guidelines generally start from. That is not a loophole, just two systems measuring different things. In our experience it is the most common reason a self-employed file needs a closer look.

We are not your accountant and we do not give tax advice. But if buying or refinancing is on your horizon, have that conversation with your tax preparer before you file rather than after. Amending afterward is not a quick fix: the IRS says processing an amended return can take months, and many lenders validate returns against IRS transcripts, so a change has to finish processing before it shows up. Whether to amend is a tax question for your preparer, not a way to qualify.

What a Bank Statement Loan Actually Is

A bank statement loan is a non-QM program that qualifies you on the deposits into your business or personal accounts over a recent period rather than on the net profit reported on your returns. Generally the lender totals the deposits that count, applies an expense factor to approximate what the business costs to run, and treats what remains as qualifying income.

Two details decide whether it works. The first is which deposits count: transfers between your own accounts, loan proceeds and one-time asset sales generally do not. The second is the expense factor. Among the programs we see, some lenders apply a fixed assumption and others may accept a statement from your CPA about actual margin. A consultant with almost no overhead and a contractor buying materials on every job can get very different results from identical deposits. Comparing how lenders handle that gap is much of the work on these files.

The Trade-Offs We Are Not Going to Pretend Away

They solve a real problem, and they come with trade-offs.

These programs are written outside agency guidelines, so they are not sold to Fannie Mae or Freddie Mac and the private investor behind the program sets its own terms. Ask us to put both options side by side in writing before you choose.

Fewer of the lenders we work with offer these programs, and in our experience their guidelines change more often than agency guidelines do.

The paperwork is different, not lighter — tax returns swapped for a stack of statements and often a letter from your tax preparer.

Prepayment penalties are worth asking about. Federal rules sharply restrict them on consumer mortgages; where they do turn up it is usually on investment-property loans, which are often business-purpose and outside those rules. Ask us to check the specific loan in front of you.

It is not a way around ability to repay. On a consumer-purpose loan those federal rules still apply, and credit, reserves, the appraisal and the property still have to hold up.

Full documentation is where we start. If your file qualifies that way, that is what we will tell you, even if you called specifically asking for a bank statement loan.

1099 Work on the Space Coast

Contract work is common on the Space Coast: engineers and technicians on launch and defense programs, machine shops and avionics subcontractors, roofers and pool crews, agents, adjusters and hygienists are often paid on a 1099 rather than a W-2. The work can be steady and the tax return still not show it.

If you are paid on a 1099 and report it on Schedule C, it is generally underwritten as self-employment income rather than as wages, however steady the work is. There are narrow exceptions — Freddie Mac allows some 1099 income to be treated as non-self-employed where specific conditions are met. What generally drives the classification is ownership and how the income is reported, rather than how consistent the work feels.

Worth raising on the first call: if you moved from a payroll job to a contract role doing similar work, say so early. Continuity between the two can matter to how a lender reads your history.

Condominiums Get Two Reviews at Once

A condominium loan generally has two things under review at once. One is you. The other is the building. Fannie Mae publishes project eligibility standards that sit apart from the borrower's own credit, so a strong file does not by itself resolve a building that fails one, and a project problem is generally not something a borrower can cure. Non-agency programs set their own project rules, and lenders do not all review projects the same way.

Florida law also gives a resale buyer something to ask for, and a seller is generally required to provide it: the association's most recent structural integrity reserve study, or a statement that one has not been completed, and, where a milestone inspection applies to the building, the inspector's summary of that report (Fla. Stat. 718.503). Not every building is required to have them, so ask what exists rather than assuming. That is a general description, not legal advice — an attorney can tell you what applies to your building. Send us the building name before you write an offer.

What to Gather Before You Call

Do not assemble everything you own. Call first and we will tell you which of these your file needs.

Personal returns with all schedules, and business returns plus K-1s if you have an ownership share

Year-to-date profit and loss, and a balance sheet if your bookkeeper produces one

Business and personal bank statements for whatever period the lender specifies

Proof the business is active — Sunbiz registration, a license, or a preparer's letter

Any 1099s you receive, and recent invoices if you are paid irregularly

An explanation and a paper trail for any large or unusual deposit

A list of your debts, flagging anything in your personal name that the business pays — some programs allow that debt to be left out of your ratios when you can document the business has been making the payments

What We Will Not Tell You

We will not tell you that you qualify before we have looked at anything. Prequalification is not preapproval, and neither is a commitment to lend. And we will say so plainly when waiting a few months would put you in a better position.

Common Questions

Questions We Get Asked

Can I get a mortgage if I am self-employed and take a lot of write-offs?

Often it is possible. Business expenses you deduct reduce the net income on your return, and net income is the figure agency guidelines generally start from. Some non-cash deductions, such as depreciation, are added back in the lender's cash flow analysis; most ordinary expenses are not. Where the returns still understate what you earn, bank statement and other non-QM programs measure income a different way. In our experience it is usually a program-fit question rather than a you problem, and it is worth a conversation before you assume the answer is no.

What is a bank statement loan?

It is a non-QM program that qualifies you on the deposits into your business or personal bank accounts over a recent period rather than on the net profit shown on your tax returns. Generally the lender totals the deposits that count, applies an expense factor to estimate what running your business costs, and uses the remainder as qualifying income. Transfers between your own accounts, loan proceeds and one-off asset sales generally do not count toward the total.

Do I have to use a bank statement loan just because I am self-employed?

No. Full documentation works for a lot of the self-employed files we see, and it is where we start. We look at your returns first and only move to a bank statement approach if the traditional calculation genuinely does not represent your income. If you can qualify on full documentation, that is what we will recommend.

How long do I need to have been self-employed before I can get a mortgage?

Underwriting generally wants a track record rather than a few months, and how long varies by program and by circumstance. Whether your business carries on work you were already doing as an employee often matters — someone who left a payroll job for a contract role in the same field can read differently than someone starting out in a new industry. Tell us the actual timeline and we will tell you where you stand before you spend money on anything.

I am paid on a 1099 by an aerospace or defense contractor. Am I self-employed for mortgage purposes?

Usually. If you report that income on Schedule C it is generally underwritten as self-employment income rather than as wages, however steady the work is and however large the client. There are narrow exceptions — Freddie Mac allows certain 1099 income to be treated as non-self-employed income where specific conditions are met — so it is worth checking rather than assuming. Mention it on the first call, along with what you were doing before, because continuity between a former payroll role and current contract work can matter to how a lender reads your history.

What should I know about the cost of a bank statement loan?

We do not publish figures. Loans written outside agency guidelines are not sold to Fannie Mae or Freddie Mac, so the private investor behind the program sets the terms and prices them. What that works out to on your file depends on your credit, the property and the lender, and we will not quote you a number before we have seen your file. Ask us to put both options in front of you in writing so you can compare rather than take our word for it.

Do you get paid more if I take a non-QM loan?

No. Two different things are doing the work in that answer. Federal rules bar a loan originator's compensation from being based on your interest rate or the other terms of your loan (12 CFR 1026.36(d)(1)); one recognized exception is compensation set as a fixed percentage of the loan amount, agreed in advance rather than deal by deal. What those rules do not do is make every lender's compensation arrangement identical, so the rest of the answer is our own commitment rather than a rule: ask us what we are paid on each option in front of you and we will walk you through it before you choose. On any one loan we are paid either by you or by the lender, never both (1026.36(d)(2)). Whatever we are paid is disclosed in writing on your Closing Disclosure with our name next to it.

Call 321-751-4403 and ask for one of our licensed loan originators at our Melbourne office, or start a prequalification — no hard credit pull, no obligation, and Tom Culpepper reviews every submission personally. Homesite Mortgage is licensed in Florida only.

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