Business owners and independent professionals often earn well but show less income on their tax returns after deductions. Alternative documentation loans let you qualify based on how your income actually flows.
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What It Is
Traditional mortgages usually rely on two years of tax returns to calculate self-employed income. If write-offs reduce your taxable income, that can understate what you can afford.
Alternative documentation, or non-QM, loans use other evidence of income. The most common is a bank statement loan, which looks at 12 or 24 months of personal or business bank deposits. Other options use a CPA-prepared profit and loss statement, 1099 income, or the value of your liquid assets.
Who It Is For
- Business owners, freelancers and independent contractors.
- Real estate agents, consultants and other commission-based professionals.
- Borrowers with significant tax write-offs.
- Retirees or investors with substantial assets but limited regular income.
Key Features
Trade-Offs to Understand
- Pricing: non-QM loans generally carry higher rates than conventional loans.
- Down payment: larger down payments are common, often 10% to 20% or more.
- Credit and reserves: stronger credit and savings improve your options and pricing.
- Conventional may still work: if your tax returns support your income, a conventional loan may cost less, and we will check that first.
Common Questions
How long do I need to be self-employed?
Most programs look for about two years of self-employment history, though some consider less with related experience.
Do bank statement loans use personal or business statements?
Either, depending on the program. Business statements typically apply an expense factor to your deposits to estimate income.
Will I need tax returns at all?
Many alternative documentation programs do not require tax returns, but you will still provide statements, identification and other verification.
Your business, your mortgage.
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Innovative Mortgage Solutions, NMLS #2302211. David L. Tripp II, NMLS #362229. Licensing can be verified at NMLS Consumer Access.
Equal Housing Opportunity. This is not a commitment to lend. All loans are subject to credit approval, underwriting guidelines, property eligibility and program availability. Program features described here are general and may vary by lender; terms are subject to change without notice.