Self-employed? Here's how to get a mortgage without a W-2

How standard underwriting reads a tax return

Conventional and FHA loans average your net income from the last two years of returns, adding back depreciation and a few other non-cash items. If your business is growing, the average understates you. If you had a strong year and took a large deduction, it can wipe you out entirely.

Bank-statement and asset-based options

Some programs use 12 or 24 months of business or personal bank statements to establish income from deposits rather than from taxable net income. Others qualify you on assets alone. These are legitimate, fully documented loans, and they exist because tax returns are a poor picture of cash flow.

What a portfolio lender does differently

A bank that keeps the loan can look at the business itself: the deposits, the contracts, the trend. It can count a business that's been open 18 months instead of 24. It can talk to your CPA. This is the ordinary work of community banking, and it's why the same bank that holds your business accounts is often the best place to get your mortgage.

• Two years of personal and business returns (if you have them)
• Year-to-date profit and loss statement
• 12 to 24 months of business bank statements
• Business license or articles of organization
• A short note on how the business works and where it's headed