How to get a self-employed buyer approved for a mortgage in Wisconsin?
Rob Miller explains the exact documentation and strategies real estate agents need to help their self-employed buyers get approved for a mortgage.
Rob Miller, Branch Manager at MadCity Home Loans, answers one of the most common questions we get from our Realtor partners.
How do I get a self-employed buyer approved for a mortgage?
If you are a Realtor working with a self-employed buyer (a 1099 contractor, freelancer, or small business owner), you know the drill: they make great money, but their tax returns show almost zero income because of massive write-offs.
When they go to a big national bank, the underwriter looks at their net income on their tax returns and denies them. Here is how we save those deals and get them to the closing table.
1. The Traditional Route (Adding Back Deductions)
First, we look at their full tax returns. As an independent broker, my team knows exactly which deductions we can legally "add back" to their income to boost their qualifying amount. Things like depreciation, depletion, and sometimes mileage can be added back to their bottom line, which often turns a denial into an approval.
What you need to tell your buyer: "Do not file your taxes for this year until Rob reviews your draft. If you write off too much, you won't qualify for the house you want."
2. The Bank Statement Loan (Non-QM)
If their tax returns truly don't support the loan amount, we pivot to a Bank Statement Loan.
With this program, we completely ignore their tax returns and W-2s. Instead, we ask for 12 to 24 months of their business or personal bank statements. We calculate their income based purely on the deposits flowing into their accounts.
This is the ultimate secret weapon for self-employed buyers. It requires a slightly larger down payment (usually 10% to 20%), but it allows buyers who write off all their income to qualify for luxury homes.
3. The 1099 Only Program
If your buyer is a strict 1099 contractor (like a traveling nurse or a consultant), we have programs that allow us to qualify them using only their 1099 forms, assuming a standard expense ratio, without ever asking for tax returns.
Related Guide: Want to partner with us to save more of your deals? Check out our Realtor Partnership Program.