How Self-Employed Borrowers ACTUALLY Qualify for Mortgages | Matt Kennedy Explains

Added: 2026-05-27

[00:00:02]Hey, if you're self-employed and you've been told you can't qualify for a mortgage or you're scared even try, I want you to watch this.

[00:00:10]Most W-2 borrowers, we just look at their pay stubs and their W-2s. Pretty easy. For self-employed borrowers, it gets a little more complicated. Let's talk about it.

[00:00:20]Okay, self-employed option one, the tax returns. What we're going to do is take your personal and business tax returns and look at a 2-year average of the business income.

[00:00:30]Sometimes we can use 1 year if the business has been in existence for 5 years or more.

[00:00:35]Let's take an example of how we look at the income because I think there's a big myth out there. So, let's say you had $200,000 of gross income and you wrote off $80,000 of expenses. Your net is $120,000.

[00:00:49]We're going to go off the $120,000, not the $200,000 of top-line revenue.

[00:00:54]So, at the end of the day, we're not using 200, we're using 120. It doesn't mean you can't qualify, but we may have to look at other options if that doesn't work.

[00:01:04]Self-employed option two is a bank statement loan. This is where we may not be able to use the tax returns for enough income, but we'll take either 12 or 24 months of the business bank statements to derive the income.

[00:01:16]For example, $100,000 of deposits and we have an expense ratio of 40%, let's say.

[00:01:22]That's going to leave you with $60,000 of income. We're going to use the $60,000 and not have to worry about your tax returns, W-2s, or any other type of income documentation.

[00:01:34]Self-employed option three would be a P&L statement loan. This is a great loan for someone that maybe had filed 2023 and 2024 taxes, but they haven't filed 2025 yet and we know that they had been a better year. So, what we can do is have your CPA prepare an audited P&L, profit and loss statement, and use the net income that shows on the P&L instead of using the prior 2 years tax returns.

[00:01:59]Option four is an asset based loan. This loan we don't look at any tax returns, W-2s, pay stubs, or any type of traditional documentation for income.

[00:02:08]What we're going to look at is your assets. Let's say you write off a lot of your expenses and your income ends up being pretty low for the year. Nobody likes to pay Uncle Sam. What we can do is take your asset statements. If you had a couple million dollars in an investment account, we can derive a cash flow off of the asset. Don't have to liquidate, just provide your statements.

[00:02:29]It's great way to get around providing all the documentation.

[00:02:34]Couple things to remember on the self-employed alternative loan structures. Number one is the rates can be slightly higher, but sometimes that's the only way we can get a deal done and get you into your home.

[00:02:45]Secondly, we love to work with self-employed borrowers. We have a great team that is has a lot of experience in getting these deals to the table. So, I'd love to sit down with you, talk about your self-employed income, and see how we can get you pre-approved.