The short answer
Lenders typically qualify self-employed borrowers using an average of net income from recent tax returns, with some non-cash deductions added back. Because deductions lower qualifying income, coordinate with your tax professional before you file if you plan to buy.
Reviewed by Jennifer Reich, Branch Manager, NMLS 162239 · Last reviewed October 16, 2026
What lenders look at
Expect a review of:
- Personal tax returns, often for two years
- Business returns for corporations, S-corps, or partnerships
- Year-to-date profit and loss, in some cases
- Business stability and income trend
Common surprises
Declining income year over year, large one-time write-offs, or a recent change in business structure can all affect qualification. Talking with Jennifer early gives you time to plan.
When non-QM may be worth discussing
If standard documentation doesn't reflect your cash flow, alternative qualification may be an option, generally at higher cost. Jennifer will explain what's available and how it compares.