If you're a business owner, 1099 contractor, freelancer, or retiree, traditional mortgages punish you for smart accounting. Learn how bank statement, 1099, P&L, and asset-based loans actually work.
If you're self-employed, you already know the bind. Your accountant works overtime every spring to legally minimize your taxable income, because that's literally their job. You take every deduction you're entitled to. You write off mileage, equipment, home office, software, the whole shebang. Smart for taxes. Brutal for a mortgage application, because on paper you look broke.
A traditional lender looks at your tax return, sees your adjusted gross income, and politely tells you that you don't make enough to buy a $400,000 house. Never mind that your business deposits $25,000 a month into checking. Never mind that you own your car free and clear and have savings that would scare a banker. The standard loan box can't see any of that. So you either find a different lender, find a different loan, or wait until you've voluntarily paid more tax just to look better on paper. None of those are good options.
Instead of using tax returns, we use what actually hits your bank account. The math becomes obvious. There are several flavors of this type of loan, and we pick the one that fits your situation best.
You give us 12 or 24 months of personal or business bank statements. We add up the qualifying deposits, apply a standard expense factor for your industry if it's a business account (a percentage we subtract for typical operating costs), and we use the result as your monthly income. Done. Real income, real number, real qualification.
If you're an independent contractor and receive a 1099 every year, we can qualify you directly off the 1099 form, sometimes with as little as a single year of history. Great option for real estate agents, consultants, gig workers, and freelancers.
Your CPA prepares a profit-and-loss statement for your business. We use the net income from that statement as your qualifying income, often combined with a couple of months of supporting bank statements to verify the numbers.
This one is the secret weapon for high-net-worth and retired buyers. Instead of using monthly income at all, we use your assets, savings, investment accounts, retirement balances. We divide the qualifying portion by a set number of months and treat that as monthly income. Suddenly the retired couple with $1.5 million in savings qualifies for a mortgage even though they don't have a regular paycheck.
Tax returns show a $30,000 loss for the year. The business actually deposits $22,000 a month into checking. We use 12 or 24 months of business bank statements, apply an industry expense factor, and the qualifying income lands right where it belongs.
She uses a personal bank account for her business income. We total the qualifying deposits and divide by the months. She qualifies on her real income, not a paper one.
He's a tradesman, a real estate agent, and a part-time consultant. We can pull income from any combination of 1099s, bank statements, or a CPA-prepared P&L. There are three different doors into the same loan.
She has $1.2 million in investments and Social Security. We use asset depletion to qualify her for a borrowing limit up to 85 percent of a new home's value, without needing to count investment withdrawals as income.
Same program, same terms. Buyers without a Social Security number qualify under the same guidelines. No second-class loan.
Get a second opinion before you accept that. Self-employed buyers who get a no from a big bank are very often a clean yes through one of these programs. The numbers usually work, the standard loan just couldn't see them.
At OpenKey Mortgage Advisors, we work with the buyers most banks won't take a second look at. As an independent mortgage broker shopping 50+ wholesale lenders, we serve Greenville, Spartanburg, Greer, and the broader Upstate of South Carolina, plus the major North Carolina markets including Charlotte, Raleigh, Asheville, Durham, and Wilmington.
Call or text Samantha Payne at (864) 387-8964, email Samantha@openkeymortgage.com, or visit openkeymortgageadvisors.com. OpenKey Mortgage Advisors LLC. NMLS Company ID 2812158. Samantha Payne, NMLS #2743877. Licensed in South Carolina and North Carolina. Equal Housing Opportunity.
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