Getting a mortgage is challenging for anyone, but there are additional hurdles if you’re your own boss.
Lenders pay stubs, W-2 forms and a record of steady employment. They consider self-employed borrowers riskier and are less likely to approve them for conventional or government-backed mortgages.
Read more: How to get a mortgage when you’re self-employed
Fortunately, there are non-qualifying mortgages (or non-QM for short), which don’t have to conform to the strict approval criteria laid out by the Consumer Financial Protection Bureau. They typically require larger down payments and charge higher interest rates, but have more flexible income and credit requirements.
CNBC Select reviewed more than 30 mortgage lenders to find the best non-QM loans for self-employed borrowers, based on rates, loan types, down payment options and other criteria. (
How did we make our picks? See our full methodology
Who is considered self-employed?
Broadly speaking, if you don’t receive a Form W-2 from an employer, you are considered self-employed. A W-2, or a “Wage and Tax Statement,” reports the wages you earned during the prior year, as well as any income tax, Social Security tax and Medicare tax your employer withheld.
According to the IRS, independent contractors, gig workers, sole proprietors, members of business partnerships, and anyone otherwise in business for themselves are considered self-employed.
There is no set mortgage type for self-employed borrowers. Instead, your options are based on the kind of work you do and the earnings documents you have available.
A bank statement loan may be ideal for a freelancer who can use their bank account to demonstrate steady work over the past several years. On the other hand, a debt-service coverage ratio (DSCR) loan is better suited to borrowers who receive passive income from renting properties.
Whatever type of non-QM loan you’re applying for, lenders typically want to see at least two years of steady income through self-employment before they’ll approve you.
Best lenders for self-employed borrowers
Best for bad credit: CrossCountry Mortgage
CrossCountry Mortgage
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Types of mortgages
Conventional, FHA, VA, USDA, jumbo, manufactured homes, refinancing, HELOC
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Minimum credit score
620 for conventional loans, 500 to 580 for some government-insured loans
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Minimum down payment
3% for conventional, 3.5% for FHA, 0% for VA or USDA
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Availability
CrossCountry Mortgage has over 600 branches and operates in all 50 states
Pros
- $6,500 in down payment assistance
- High scores for customer satisfaction
- May be able to close within 10 days
Cons
- Higher-than-average rates
- Rates not available online
Who’s this for? Most lenders require a credit score of 620 or higher for a non-QM loan, but accepts scores as low as 500 for certain non-traditional mortgages.
Standout features: CrossCountry’s FastTrack review speeds up the underwriting process, allowing approved borrowers to close in as few as 10 days.
Best for a high debt-to-income ratio: First National Bank of America
First National Bank of America Mortgage
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Mortgage types
Bank statement, 1040/1099, profit & loss statement, ITIN, non-QM vacant land, manufactured homes, and condo loans.
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Terms
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Minimum credit score
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Minimum down payment
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Availability
First National Bank of America lends in all 50 U.S. states and Washington, D.C.
Pros
- Available nationwide
- Allows a debt-to-income ratio of up to 60% for self-employed borrowers
- Provides land loans
Cons
- Does not provide conventional, government-backed or second mortgages
- Down payment of at least 15% required on all loans
Who’s this for? Most lenders won’t approve borrowers with a debt-to-income ratio higher than 45% or 50%. accepts DTIs up to 60%, making it an excellent option for small business owners, who are often highly leveraged.
Standout features: FNBA’s Alt-A Premier non-QM mortgage makes up to $3 million available to borrowers with debt-to-income ratios of 60%. In addition, no cash reserves are required and borrowers can put gift funds toward their down payment.
Best online experience: New American Funding
New American Funding
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Types of mortgages
Conventional, FHA, USDA, VA, jumbo, refinancing, home equity loan, reverse mortgage
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Terms
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Minimum credit score
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Minimum down payment
0% for VA or USDA loans, 3% for conventional, 3.5% for FHA
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Availability
New American Funding lends in all 50 states and Washington, D.C.
Pros
- Flexible credit requirements
- Helps buyers make all-cash offers
- Programs to increase minority homeownership
- Nationwide availability
Cons
- High fees
- Customized rates not available online
- No home equity loans
Who’s this for? New American Funding is ideal for self-employed borrowers who want a streamlined application process. Its sleek website and mobile app list its competitive rates and enable homebuyers to track payments, equity and home value. It also offers online and hybrid closings, allowing you to review and sign most documents electronically.
Key features: NAF Cash offers upfront funds, enabling buyers to make all-cash offers and gain a competitive edge in a tight housing market.
Best for loan variety: Guild Mortgage
Guild Mortgage
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Types of mortgage
Conventional, FHA, VA, USDA, Arrive Home, Zero Down, jumbo, renovation, refinancing, reverse mortgages, home equity loans, HELOC
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Terms
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Minimum credit score
540 for FHA, VA and USDA loans; 600 for Zero Down; 620 for conventional loans, 680 for jumbo loans. Nontraditional credit options are available
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Minimum down payment
0% for USDA, VA, Arrive Home™ or Zero Down; 1% for conventional loans, 3.5% for FHA loans
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Availability
Guild Mortgage lends in all U.S. states except New York.
Pros
- Homebuyer Express loan closes in 17 days or borrowers can receive $500 in closing costs
- More than 740 branches in 46 states
- Offers home equity loans and reverse mortgages
- E-closings available
Cons
- Rates are not available online
- Does not issue mortgages in New York
- Mixed customer satisfaction scores from J.D. Power
Who is this for? Guild Mortgage offers a robust variety of non-QM mortgages, including bank statement loans, DSCR loans, and interest-only options, which can enable you to allocate more funds to other expenses early in your mortgage.
Standout features: Guild also employs alternative credit check methods for government-backed loans, making it easier to qualify even with less-than-ideal credit.
Best for HELOCs: Angel Oak Loan Solutions
Angel Oak Loan Solutions
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Mortgage types
Bank statement, DSCR, 1099 income, foreign national, ITIN, profit & loss, non-QM condo, investment, bank statement HELOCs, closed-end second mortgage, DSCR closed-end second lien
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Terms
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Minimum credit score
640 for bank statement, 1099 income, profit & loss and ITIN mortgages; 660 for agency mortgage; 680 for DSCR and jumbo loans; 700 for closed-end second mortgages, bank statement HELOCs and DSCR closed-end second liens
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Minimum down payment
5% for agency mortgages, 10% for bank statement loans and 1099 income loans, 15% for DSCR loans, 20% for profit and loss loans and ITIN mortgage loans, 25%-30% for asset qualifier and foreign national mortgages
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Availability
Angel Oak Loan Solutions lends in all U.S. states except Alaska, Connecticut, New York and Vermont
Pros
- Robust non-qualifying loan options
- Offers non-QM second mortgage solutions like HELOCs
Cons
- Conventional loan products not available
- Not available in all states
Who’s this for? Angel Oak Loan Solutions offers several home equity options for self-employed individuals, including a bank statement HELOC.
Standout features: If a HELOC isn’t the right fit, AOMS also offers closed-end second mortgages and DSCR closed-end second liens.
Best for speedy closing: AD Mortgage
AD Mortgage
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Mortgage types
Conventional, FHA, VA, Fannie Mae HomeReady, Freddie Mac Home Possible, Conventional High-Balance, jumbo, refinance, second mortgage
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Non-QM mortgages: DSCR, ITIN, profit and loss, 1099, asset utilization, foreign national, 12/24-month bank statement
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Terms
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Minimum credit score
620 for conventional, HomeReady and Home Possible; 580 for FHA and VA loans; 660 to 720 for jumbo loans; 620 to 660 for non-QM loans
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Minimum down payment
3% for conventional, HomeReady and Home Possible; 0% for VA loans; 3.5% for FHA loans; 10% to 20% for jumbo loans; 10% to 25% for non-QM loans
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Availability
A&D Mortgage lends in all U.S. states except Alaska and Hawaii.
Pros
- non-QM mortgages available
- Robust loan offerings for self-employed borrowers, investors and non-citizens
- Online loan calculators and concierge services
- Can close on home loans in 24 to 48 hours
Cons
- No USDA loans
- Borrowers must work with a mortgage broker
Who’s this for? advertises that it approves and funds home loans in as little as 24 hours. Borrowers applying with this wholesale lender must work with a third-party mortgage broker.
Standout features: AD offers Individual Taxpayer Identification Number (ITIN) loans for foreign nationals, immigrants and other borrowers without a Social Security number. It’s also one of the few lenders with an online calculator for non-QM loan terms.
Types of non-QM loans
There are a range of mortgages for individuals with non-traditional income streams, weak credit, no Social Security number or who otherwise don’t qualify for a conventional home loan.
- Bank statement loan: Uses 12 to 24 months of bank statements to document income rather than traditional tax documents
- 1040 or 1099 loan: Freelancers, contractors, or gig workers providing proof of their earnings without a W-2.
- DSCR loan: Debt service coverage ratio loans enable real estate investors to demonstrate steady cash flow with rental income, rather than personal income.
- P&L loan: Rather than a W-2, small business owners can use their business’s profit and loss (P&L) statements to verify income.
- Interest-only loan: Borrowers only have to pay interest on the loan for a specified period.
- ITIN loans: Individual Taxpayer Identification Number loans, also known as foreign national loans, are available to non-citizen residents, non-residents and others without an SSN.
How to get a mortgage if you’re self-employed
To get a mortgage when you’re self-employed, look for lenders that offer non-QM loans.
You’ll need to provide the standard identification and financial statements, along with documents verifying you have adequate income:
- Employment verification: A business license, proof of insurance, verification of membership in a professional organization, or a letter from a client or CPA.
- Tax returns: Tax returns for the past two years and any tax forms relating to your business, including Schedule C for LLCs, Form 1065 for partnerships and Form 1120 for C or S corporations.
- Business financials: Bank records, P&L reports or cash-flow statements for the last two years
- Future-looking documents: Structured forecasts of how your business is expected to grow and how much you’ll earn in the years ahead.
Once you apply, it can take several weeks to process and underwrite the loan, during which you’ll need an appraisal and a title search. Once that is done, you’ll attend the closing and sign the paperwork that outlines the amount you’ll receive and the rate and terms of your repayment.
Mortgage FAQs
What is a non-QM loan?
A non-QM, or non-qualifying loan, doesn’t adhere to the Consumer Financial Protection Bureau’s strict mortgage approval criteria. They usually require larger down payments and charge higher interest rates, but have more flexible income and credit requirements. There isn’t a single type of non-QM loan, however. Some rely on bank statements or rental income, while others allow borrowers to use an ITIN instead of a Social Security number.
Do self-employed borrowers need a larger down payment?
Yes, traditionally self-employed borrowers need a down payment of 15% to 20%, compared to the 5% required by traditional borrowers taking out a conventional mortgage.
How many years of self-employment do you need for a non-QM loan?
Lenders typically require self-employed applicants to provide tax returns or other financial documents that establish a steady income for at least two years.
Why trust CNBC Select?
At CNBC Select, our mission is to deliver high-quality service journalism and comprehensive consumer advice to our readers, enabling them to make informed financial decisions. Every mortgage review is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of mortgage products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content independently of our commercial team and any outside third parties, and we pride ourselves on maintaining high journalistic standards and ethics.
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Our methodology
CNBC Select reviewed dozens of mortgage lenders to find the best ones for those who are self-employed, focusing on:
- Loan type: All the lenders on our list offer a range of non-QM options, including bank statement loans, DSCR loans and P&L loans.
- Loan variety: We considered the proportion of a business dedicated to non-QM loans and mortgages available to self-employed borrowers in general.
- Availability: We considered the number of states a lender operates in and the products available in each state.
- Fees: when reviewing each lender, we evaluated common mortgage fees, including origination fees, closing costs and private mortgage insurance.
- Closing: Lenders with shorter-than-average closing times were given more weight.
- Customer Service: We evaluated each lender based on the quality of its customer service, the availability of customer representatives and whether it offered a digital approval process. When possible, customer satisfaction rankings from J.D. Power and the Better Business Bureau were incorporated.
We also considered CNBC Select audience data when available, such as general demographics and engagement with our content and tools.
Based on this criteria, our picks for best mortgage lenders for self-employed are:
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Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
