How Can Self-Employed Buyers Secure a Mortgage in 2025?

By Jason Baker

Jason Baker is the leading listing agent in the entire regional mls for residential and or total units sold, 8 years running. He is a tireless worker, and surrounds himself with the best admin and sales team in Montana...and the results speak for themselves.

Securing a mortgage when you’re self-employed can feel like navigating a maze. For many, the process can seem more complicated than for traditional W-2 employees, especially with fluctuating income or unconventional documentation. However, in 2025, there are more options than ever for self-employed buyers to secure a home loan that fits their unique financial situation. ** ** If you’re self-employed and looking to buy a home, this blog post will guide you through the key mortgage options available and how you can navigate the process more effectively.

1. Understand your income and tax situation. The first step for self-employed buyers is understanding the financial situation and gathering the necessary documentation. Lenders typically require tax returns, bank statements, and proof of assets to verify stable income. However, most self-employed buyers often find it hard to qualify because they’ve written off expenses to lower their tax bill, which can make their income look inconsistent. Therefore, make sure you have your last two years of tax returns and 12–24 months of bank statements ready to show a steady stream of income and be prepared to talk through any deductions or inconsistencies with your lender.

2. Conventional loans for self-employed borrowers. Conventional loans, backed by Fannie Mae and Freddie Mac, are popular for their competitive rates, but they require strong documentation like tax returns and W-2s. These can be tricky if you’re self-employed. The biggest challenge is meeting income requirements, especially if business deductions lower your taxable income. Still, if you’ve paid significant taxes and have consistent records, you could qualify. Just make sure your tax returns are current and show your income in the best light, and talk to a mortgage expert to see if this route makes sense for you.

3. Non-QM loans: A flexible option for self-employed buyers. If a conventional loan isn’t an option, a Non-Qualified Mortgage (Non-QM) loan could be the one for you. These loans don’t rely on traditional income documentation. Instead, lenders use 12–24 months of bank statements to assess your income, which is ideal if you’ve written off a lot to lower your tax bill. While non-QM loans often come with slightly higher interest rates, they give many self-employed buyers the flexibility they need to get approved. If your tax returns aren’t strong enough for a conventional loan, just ask your lender about Non-QM options and be ready to show consistent income through your bank statements.

4. 1099 loans: Perfect for freelancers and contractors. If you’re a freelancer or contractor who receives 1099s instead of W-2s, a 1099 loan might be the best for you. These loans let you use up to 90% of your 1099 income and usually only require one year of income documentation—perfect if you don’t have the typical work history or tax returns for a conventional loan. They’re especially helpful for professionals in real estate, solar sales, or other gig-based roles with variable income. So, gather your 1099s from the past year and work with a lender who understands 1099 loans to help streamline the process.

5. Work with a mortgage expert. Navigating mortgage options when you’re self-employed can be tricky, but you don’t have to figure it out alone. Working with a mortgage expert who understands the challenges self-employed buyers face makes a big difference. Look for someone experienced with self-employed clients, share your financial documents openly, and explain any inconsistencies upfront. That transparency helps them find the best loan options—whether it’s conventional, Non-QM, or a 1099 loan—based on your unique situation.

Securing a mortgage as a self-employed buyer might be more complex than for W-2 employees, but there are plenty of options in 2025, including conventional, non-QM, and 1099 loans. By understanding your finances, gathering the right documents, and working with an experienced lender, you’ll be on the path to getting pre-approved and securing your dream home. If you’re ready to take the next step, reach out today, and let’s explore the best mortgage options for your situation.