The short answer
Self-employed borrowers can qualify for conventional and government loans, usually by documenting income with personal and business tax returns. Because write-offs reduce qualifying income, planning ahead with your loan officer and tax professional matters.
Reviewed by Jennifer Reich, Branch Manager, NMLS 162239 · Last reviewed October 16, 2026
How is self-employed income calculated?
Lenders typically average your net self-employment income over recent tax years, add back certain non-cash deductions like depreciation, and look at the stability and trend of the business. Two years of history is common, though shorter histories may be considered in some cases.
What if my tax returns don't reflect my cash flow?
If deductions significantly reduce your taxable income, you may qualify for less than expected under standard guidelines. In some situations, alternative qualification through non-QM financing may be worth discussing — with a clear understanding of the cost differences.
Questions to ask Jennifer
- Which tax years and documents will you need?
- How would my deductions affect qualifying income?
- Should I talk with my CPA before filing this year?
- Is non-QM worth considering for my situation?