Self-Employed Mortgages: The Complete Guide

A Guide to Getting a Mortgage for Individuals With Non-Traditional Income Sources

Being your own boss can come with many perks, but when it comes to securing a mortgage, it can sometimes feel like a disadvantage – an unnecessary cost that stems from when traditional institutions fail to comprehend the driven nature of the entrepreneurial spirit and the options that they need. The good news is that for self-employed individuals, there are several lending options such as self-employed mortgages that can provide lending solutions for those with non-traditional income streams, those without W2s, and/or those who want flexibility in principal reduction payments.

In this guide, we’ll be going over everything you need to know about self-employed mortgages, who they are for, the flexibility they provide, loan options that fall under the self-employed mortgage category and more. 

What is a Self-Employed Mortgage?

A self-employed mortgage is a specialized type of home loan that was designed with self-employed individuals in mind. Self-employed mortgages give self-employed individuals the opportunity to qualify for a mortgage without standard income documentation, such as W2s, pay stubs, and/or tax returns. While these traditional income documents aren’t required, self-employed mortgage lenders typically rely on alternative income verification methods instead, such as bank statements. So, a borrower’s income is still verified with self-employed mortgages – just in a different way. Self-employed mortgages also allow added flexibility in principal reduction payments for annual, quarterly or commissioned borrowers. 

Throughout the mortgage industry, self-employed mortgages may be called different names depending on the loan options and what the lender offers, like No W2 or Tax Return Mortgages, No Tax Return Mortgages, Mortgages for Entrepreneurs, or Mortgages for Non-Traditional Borrowers. Keep in mind that this varies by lender. At Defy, they fall under our “Alternative Advantage” product category, which includes bank statement loans, P&L loans, and interest-only loan options. 

Who Would Benefit From a Self-Employed Mortgage?

Just like its name, self-employed individuals or people with irregular income sources would benefit the most from a self-employed mortgage, such as:

  • Entrepreneurs
  • E-commerce Professionals
  • Small Business Owners
  • Self-Employed Individuals
  • Freelancers
  • Gig Workers
  • Individuals With Multiple Streams of Income
  • Independent Contractors
  • Self-Employed Lawyers
  • Doctors in Private Practice
  • Artists
  • Real Estate Investors
  • Truck Drivers
  • Individuals with unique circumstances who would not be able to qualify for a traditional mortgage

A food delivery gig worker would be eligible for self-employed mortgages.

The Benefits of Self-Employed Mortgages

Self-employed mortgages have many great benefits, including: 

  • Greater Flexibility: Since self-employed mortgages are typically non-QM, lenders who offer them tend to have more flexibility when it comes to lending requirements, guidelines, and criteria. 
  • Alternative Income Verification: Provides alternative income verification options for those who can’t show tax returns, W2s, and/or pay stubs. 
  • Diverse Loan Options: More loan options for entrepreneurs and self-employed individuals depending on their needs. 
  • Access to Homeownership: Opens up the door to homeownership for a wider variety of people. 
  • Faster Pre-Approval: Self-employed mortgages typically have a faster pre-approval process

Types of Self-Employed Mortgages

Even though a self-employed mortgage sounds like one type of loan, it’s actually a term that encompasses several different loan options under the non-QM loan space. Specialized lenders realize that self-employed individuals usually have unique circumstances, so many of them offer different loan options to cater to various borrowers’ needs. Below, we’ve listed some of the common self-employed mortgage types, along with the ideal candidate(s) for each. 

  • Bank Statement Loans: Requires bank statements (personal or business) rather than traditional income verification. Even though they don’t require any tax returns or W2s to qualify, lenders still do their due diligence by evaluating each borrower’s ability to repay using bank statement documents. 
    • Suitable for: Self-employed individuals, gig workers, entrepreneurs, independent contractors, freelancers, small business owners, and anyone who has an irregular source of income.
  • Profit & Loss (P&L) Statement Loans: Requires business profit & loss statements rather than traditional income verification. P&L statements are great for business owners and can be used to verify income from a business, which can be used toward loan qualification purposes.
    • Suitable for: Business owners, self-employed individuals, entrepreneurs
  • Asset Depletion Options: Requires proof of liquid assets rather than traditional income verification. With asset depletion options, borrowers can prove they have enough money to cover the loan even without regular income from employment or qualify for a loan simply based on their liquidity (cash, investment portfolios, etc).
    • Suitable for: High-net-worth individuals, entrepreneurs, self-employed individuals, retirees, and anyone else with significant assets that can replace a traditional income.
  • Interest-Only Options: Allow borrowers to pay only the interest on the loan for a set period of time, with fixed rates and no requirement for a principal paydown. Following that period, you can either refinance, pay the remaining balance in full or begin making regular monthly payments.

    • Suitable for: Self-employed, ideal for annual, quarterly or commissioned borrowers who want flexibility in principal reduction payments, real estate investors, and anyone with upcoming payments (like college tuition) who want to free up cash.
  • DSCR Loans: Uses a property’s rental income as a way of assessing repayment ability rather than traditional income.
    • Suitable for: Self-employed real estate investors, landlords, and aspiring landlords (those looking to purchase an investment property). 

Qualification Requirements for Self-Employed Mortgages

The qualification requirements for each type of self-employed mortgage depend on the loan type and the lender. Although requirements may vary, we’ve listed Defy’s qualification requirements for each loan type below to give you a better understanding of what you might need. 

  • Bank Statement Loans
    • 12-24 months of bank statements
    • Credit score (FICO) of 620+ 
    • Minimum down payment of 10%
  • Profit & Loss (P&L) Statement Loans
    • Business profit & loss statements
    • Proof that the borrower has been self-employed or the business has been in existence for at least 2 years
    • Credit score (FICO) of 600+ (with a reduced LTV)
    • Minimum down payment of 10%
  • Asset Depletion Options
    • Liquid asset documentation
    • Credit score (FICO) of 620+
    • Minimum down payment of 20%
  • Interest-Only Options:
    • No requirement for a principal paydown
    • 30-year or 40-year loan amortization
    • Minimum down payment of 15%
  • DSCR Loans
    • Proof of rental income 
    • DSCR ratio of 0.75+
    • 3 months cash reserve
    • Credit score (FICO) of 620+
    • Minimum down payment of 15%

Self-employed mortgages allow borrowers to use alternative income documents.

Self-Employed Mortgages vs. Conventional Loans

When comparing self-employed mortgages and conventional loans, conventional loans are usually the standard route that salaried 9-5 employees take toward homeownership. However, those who are self-employed tend to face greater barriers when trying to qualify for a conventional loan without having any traditional income documents.

This is where the main difference between the two comes in – the way your income is verified by the lender. Conventional loans rely heavily on documents like W2s, pay stubs, and tax returns to create a clear picture of your income stability. Since self-employed individuals don’t have access to the same documents, lenders who offer self-employed mortgages need to get more creative with it. Documents like bank statements, profit & loss statements, and asset documents replace the need for traditional income documents. 

Another difference between the two is the flexibility that they offer. Conventional loans are less flexible by nature, having standardized terms, interest rates, and eligibility criteria set. On the other hand, since specialized lenders aren’t restricted by the same guidelines, self-employed mortgages can be tailored to fit the borrower’s needs. 

If you’re self-employed and looking for home financing, rather than jumping through hoops by applying for a conventional loan first, explore our self-employed mortgage options to get it right the first time. 

Top 5 Self-Employed Mortgage Lenders

  • Fairway Independent Mortgage Corporation

Founded in 1996 by Steve Jacobson in Wisconsin, Fairway Independent Mortgage Corporation was recently named the #1 company in mortgage origination for customer satisfaction by J.D. Power. Rather than operating solely online, Fairway Independent Mortgage has physical branches for interested borrowers to visit and speak to someone in person. They offer loans in all 50 states, which resulted in a whopping total loan volume of $27.5 billion in 2023

  • Angel Oak Mortgage

Angel Oak Mortgage is headquartered in Atlanta, Georgia with the mission of helping underserved borrowers, primarily the self-employed, who have limited access to the wealth-building opportunities of homeownership. Operating in 46 states and Washington D.C., they have a plethora of self-employed mortgage options to choose from, such as bank statement loans, DSCR loans, 1099 loans, and more. 

  • Griffin Funding


Founded in 2013 in San Diego, California, Griffin Funding offers products that are catered towards self-employed individuals, VA-eligible, and real estate investors. On top of having a wide array of non-QM loans available, they also offer conventional and VA loans. Their non-QM loan options include bank statement loans, DSCR loans, asset-based loans, and more. 

  • Defy Mortgage

Defy Mortgage is an up-and-coming titan of the non-QM mortgage industry with the belief that obtaining a mortgage should be an empowering experience. Their overall mission is to empower dreams, enrich lives, and elevate the mortgage experience for non-traditional borrowers, such as foreign nationals, real estate investors, business owners, retirees, and more. Defy realizes that the number of gig workers and self-employed individuals is at an all-time high and today’s borrowers have different needs than what traditional loans can fulfill. Offering a full product suite to fit the unique circumstances of their borrowers, Defy has bank statement loans, DSCR loans, P&L loans, asset depletion options, and more. Their strong understanding of the current market and the CEO, Todd Orlando’s, 25+ years of experience in the mortgage and banking space puts them on the map. 

  • North American Savings Bank

Originally established in the early 1920s in St. Louis, Missouri as the City Building and Loan Association, North American Savings Bank (NASB) is now a full-service bank with a large range of traditional banking products, along with specialized non-QM lending products. Their non-QM products are mostly designed for self-employed individuals and real estate investors. NASB offers bank statement loans, DSCR loans, 1099 loans, asset-depletion loans, and more. 


What is a Self-Employed Mortgage?

A self-employed mortgage type of home loan that gives self-employed individuals the opportunity to qualify for a mortgage without standard income documentation, such as W2s, pay stubs, and/or tax returns. While these traditional income documents aren’t required, self-employed mortgage lenders typically rely on alternative income verification methods instead, such as bank statements. Self-employed mortgages also allow added flexibility in principal reduction payments for annual, quarterly or commissioned borrowers.

What If You’ve Been Self-Employed for Less Than Two Years?

If you’ve been self-employed for less than two years, it’s still possible to get a self-employed mortgage. However, expect to provide additional documentation as proof of stable income. For a profit & loss statement loan; however, you must be self-employed for at least 2 years or the business must be in existence for at least 2 years.

What is a Non-QM Loan?

A non-QM loan is a type of mortgage that does not conform to the lending criteria set by the Consumer Financial Protection Bureau (CFPB). This means that non-QM loans allow lenders to be more flexible with their standards and requirements for borrowers.

Are Self-Employed Mortgages Non-QM Loans?

Yes, self-employed mortgages typically fall under the non-QM loan umbrella. Since self-employed mortgages use alternative income verification, they don’t follow the lending standards set by the CFPB. 

Can You Get a Conventional Loan as a Self-Employed Individual?

While possible, getting a conventional loan as a self-employed individual can be challenging. More documentation is usually required and stricter requirements need to be met – resulting in borrowers who are self-employed to more likely get turned down. 

What are Self-Employed Mortgage Lenders Looking For?

Self-employed mortgage lenders typically look for stable income, consistent earnings, a good credit history, and a solid financial profile.

What Documents Do You Need to Provide for a Self-Employed Mortgage?

The documents you need for a self-employed mortgage may vary on the exact loan type and the lender. For example, if you choose a bank statement loan, which is a type of self-employed mortgage, expect to provide anywhere between 12 to 24 months of recent bank statements. 

What are the Pros and Cons of Self-Employed Mortgages?


  • Alternative income verification
  • More flexibility when it comes to lending requirements, guidelines, and criteria
  • Typically a faster pre-approval process
  • Diverse options catering to individual borrower needs
  • Gives self-employed individuals an opportunity for homeownership
  • Potential for larger loan amounts if you have a successful business


  • Limited lender options
  • Down payments may be higher

Who Offers Self-Employed Mortgages?

Self-employed mortgages are offered by specialized lenders, like Defy. Specialized lenders have the expertise to handle unique borrower situations that don’t fit the traditional mold. 

What are the Requirements for a Self-Employed Mortgage?

Specific requirements vary by lender, but at the minimum, expect to provide some form of income verification, your credit score, and a down payment. 

Can You Refinance a Self-Employed Mortgage?

Yes! You can refinance a self-employed mortgage. 

What are the Credit Score Requirements for Self-Employed Mortgages?

Minimum credit score requirements for self-employed mortgages vary between lenders. At Defy, most of our self-employed mortgages require a credit score of 620 or higher. 

Are Self-Employed Mortgages Safe?

Yes! Self-employed mortgages are safe as long as you choose a reputable and experienced lender. 

What are the Down Payment Requirements for Self-Employed Mortgages?

Down payment requirements for self-employed mortgages can vary by lender. At Defy, we require a minimum of anywhere between 10% to 20% depending on the loan type and your financial profile, including credit score. 

Can You Get a Self-Employed Mortgage for an Investment Property?

Yes! It’s possible to get a self-employed mortgage for an investment property. Make sure to double-check specific lenders’ policies. 


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