Write-offs Are Smart Business — The Quick Read: Your CPA is right to tell you to take every deduction you qualify for. But every dollar you write off is a dollar a traditional mortgage lender won’t count as income. As of September 25, 2026, rates are climbing and inventory is loosening, which means self-employed borrowers need every qualifying tool they can get — and a growing share of them are turning to loans that qualify on bank deposits instead of traditional personal-income documentation.
I’ve spent eighteen years in lending watching this exact tension play out, and it hasn’t gotten any less confusing for the business owners living through it.
Key Takeaways
- The 30-year fixed rose for a fourth straight week, hitting 7.03% for the week of September 24, 2026, per Freddie Mac’s survey.
- Existing-home inventory topped 1.6 million units for the first time since November 2019, per NAR’s August report.
- Legitimate business deductions lower taxable income by design — and that same income is what a conventional lender reads off your tax return.
- Bank statement loan programs qualify self-employed borrowers on business deposits, not the net income line on a Schedule C.
- The bank statement borrower profile has changed. It’s no longer a subprime category.
What Changed This Month
Rates moved up for a fourth consecutive week, and existing-home inventory hit a level not seen in nearly seven years. Both matter to self-employed borrowers weighing whether to buy, refinance, or wait.
The 30-year fixed averaged 7.03% for the week of September 24, 2026, up from 6.95% the week before, according to Freddie Mac’s survey. That marked the fourth weekly increase in a row, with rates climbing roughly 30 basis points from early September to month’s end. Freddie Mac’s survey for the same week a year earlier put the 30-year average more than 70 basis points lower. That gap is meaningful, and it’s part of why refinance applications fell sharply this month.
Existing-home sales told a similar story of a market cooling under the weight of financing cost. Sales fell 2% month over month in August to a seasonally adjusted pace of 3.98 million units, with the median price rising to $429,100, per NAR’s report. Inventory rose to 1.62 million units — the first time since November 2019 it’s crossed 1.6 million — pushing months of supply to 4.9, the highest reading in over a decade.
On the policy side, the Fed raised its target range by a quarter point in mid-September, its first hike since 2023, moving up from the level it had held since its June 2026 meeting per the Federal Reserve’s statement. Higher rates and a lot more inventory to choose from. That combination changes the calculus for anyone weighing a purchase this fall, self-employed borrowers most of all, because their financing options depend heavily on how they document income.
What I’m Seeing in the Files
Here’s what hasn’t changed in eighteen years: a self-employed business owner takes every legitimate write-off available, and nobody should blame them for it. That’s how a business is supposed to run. Mileage, home office, equipment, contractor fees — it all adds up, and it should. But it means the tax return in front of a lender shows a fraction of what the business actually produces. That gap is the whole problem.
A bank statement loan solves it differently. Instead of starting from a Schedule C net-income figure, the underwriter looks at what actually flowed through the business bank accounts. It’s a documentation method, not a credit shortcut — you can read the specifics on Lendmire’s bank statement loan programs page, because this column isn’t the place for program numbers.
What’s changed is who’s using this tool. When I started in lending, bank statement loans were considered a fallback for borrowers with weak credit. Today it’s close to the opposite. Most of the bank statement borrowers I see carry strong credit, in the 700s, pay their obligations on time, and run genuinely successful businesses. Some of these owners make millions of dollars a year in revenue. They just don’t show it on paper, because their accountant did their job well.
That shift shows up in the data too. Bank statement loans now account for 30% to 40% of non-QM originations, with average borrower FICOs of 737, according to HousingWire’s reporting. A separate AD Mortgage securitization this year carried a weighted average borrower credit score of 754. These aren’t distressed borrowers scraping by. They’re prime-credit business owners whose traditional personal-income documentation just don’t tell the whole story. Exact terms depend on the lender’s guidelines, property type, leverage, and a full review of the borrower’s file.
I also talk daily with people who aren’t running a single business at all — they’re stitching together two, three, sometimes four income streams because that’s what it takes to make ends meet. Traditional employment income from one job, 1099 income from a side gig, maybe some freelance work on top. None of it alone qualifies them for a conventional mortgage, and none of the pieces add up cleanly on a tax return either. For this group, a bank statement loan often isn’t a workaround. It’s the only route that reflects how they actually earn.
What It Means for Self-Employed Borrowers
Here’s the plain math: a lender reading your Schedule C sees your net income after every deduction, not your gross revenue and not your actual cash flow. Depreciation, Section 179 equipment expensing, vehicle write-offs, home-office deductions — some of these get added back under conventional guidelines, and some don’t. The result, for a lot of business owners, is a qualifying income number that looks nothing like the money moving through their accounts every month.
This is exactly the gap bank statement underwriting is built to close. Instead of asking “what did you report to the IRS,” it asks “what came into your business.” That’s a fundamentally different question, and it produces a fundamentally different answer for anyone whose deductions are aggressive relative to their actual take.
None of this means write-offs are a mistake. They’re smart tax planning, full stop. The mistake is assuming your tax strategy and your mortgage strategy have to use the same documentation. They don’t have to, and increasingly, they don’t.
If you’re a business owner running deposits through separate accounts, it’s worth understanding how lenders actually treat business bank accounts on a self-employed mortgage — the mechanics matter more than most people expect going in.
My Take
I think the stigma around bank statement lending is about a decade out of date, and the numbers back that up. Non-QM originations are projected to rise to $175 billion this year from $108 billion last year, and cumulative losses across the roughly $281 billion originated and securitized since 2018 sit at a low 3.6 basis points, per HousingWire’s coverage. That’s not a category quietly imploding. That’s a category with a track record.
I’ll add the honest caveat, because the data has one: delinquencies have crept up in some 2022-2024 vintages, with cash-out refinances and looser bank-statement underwriting flagged as contributors, while lenders have since tightened underwriting on more recent vintages. So the “strong credit across the board” story is directionally true — average FICOs really do cluster in the 700s — but it’s not a guarantee that every file performs the same way. Underwriting discipline still matters, on both sides of the table.
My read: the borrowers who benefit most from this product aren’t the ones with something to hide. They’re the ones whose income simply doesn’t compress cleanly into a single tax-return line. A dentist with a thriving practice who wrote off a new office buildout. A consultant who works four different clients under four different arrangements. A gig-economy worker piecing together delivery driving, freelance design, and weekend photography gigs into a real income, one that a W-2-only underwriter has no box for.
What I’d Do Now
If you’re self-employed and thinking about a purchase or a refinance this fall, don’t wait on your tax return to tell your income story. Start the conversation with a broker before you file, not after, so you understand which documentation path actually fits your situation.
If you’re weighing a second home purchase and your income runs through a business, it’s worth reviewing how a second home mortgage works on business bank statements before you assume a conventional loan is your only option.
On rates: a mortgage rate lock is simply an agreement to hold a specific rate for a set window while your loan moves through processing. Floating means you’re leaving that rate exposed to market movement until you decide to lock. With rates having risen four straight weeks per Freddie Mac’s survey, borrowers close to application should understand that a quote gathered last week and a quote gathered this week reflect two different markets — they aren’t directly comparable, and that’s true whether you’re shopping conventional or non-QM.
If you’re weighing a purchase or a refinance this fall, Lendmire can walk you through how the current bank statement and non-QM programs fit your file, subject to lender guidelines.
For the end-to-end picture of how these loans work — qualification, structures, and the full process — see Lendmire’s complete DSCR loans guide.
Frequently Asked Questions
Does taking more tax deductions actually hurt my ability to get a mortgage?
Yes, on a conventional loan it typically does. Lenders qualify you on the net income shown on your tax return, so the more you write off, the lower that number looks — even if your actual cash flow is strong. A bank statement loan sidesteps this by qualifying on deposits instead, subject to lender guidelines.
Are bank statement loans only for people with bad credit?
No, that reputation is outdated. Average borrower credit scores on bank statement loans run in the 700s today, per HousingWire’s reporting, and many of these borrowers run highly profitable businesses that simply show reduced income on paper.
Why did mortgage rates jump so much this month?
The 30-year fixed rose for a fourth straight week to 7.03% as of September 24, 2026, according to Freddie Mac’s survey, following the Fed’s rate hike in mid-September. Rate direction like this tends to push more self-employed borrowers toward documentation flexibility rather than waiting for rates to reverse.
I work multiple gig jobs instead of running one business. Do I still qualify for this kind of loan? It depends on your file, but the underlying idea applies. If your income comes from several 1099 or self-employed sources that don’t cleanly total up on a single tax return, a bank statement approach may reflect your actual earnings better than a conventional W-2-based review, subject to lender program eligibility.
Should I stop taking deductions before I apply for a mortgage?
I wouldn’t recommend abandoning legitimate deductions just to inflate a number on paper. A better approach is matching the loan program to how you actually document income, rather than changing your tax strategy to fit a lending box that wasn’t built for self-employed cash flow.
About Lendmire
Lendmire — NMLS# 2371349 — is a mortgage brokerage whose founder writes this column. DSCR investor programs reach 41 markets, including Washington, D.C.; consumer programs such as bank statement, HELOC and down payment assistance loans are arranged in 16 states; every loan is placed with, and underwritten by, a wholesale lender under that lender’s guidelines. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
Get Started
Ready to find the right loan for you?
In about 30 seconds you can review financing options available for your home or investment property. No commitment required.
Informational only. Not a Loan Estimate, approval, or commitment to lend. Program availability and eligibility are subject to lender guidelines, credit approval, property review, and underwriting.
References
2. NAR Existing-Home Sales, August 2026
3. Federal Reserve FOMC statement, June 2026
4. HousingWire — Non-QM Originations Forecast
This article is part of Lendmire’s Mortgage News series — every loan program’s qualification details, guidelines, and scenarios live on the loan options page.
Related reading: Buying Local In September 2026 Costs More If You Wait · Brokers Cost More — And Other Mortgage Myths Worth Killing · Record Home Equity Meets Rising Rates — HELOCs Fill The Gap
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
- North Carolina Real Estate Broker · License# 343312 · Verify on NCREC
- North Carolina Insurance Producer · License# 19053198 · Property, Casualty, Life, Health · Verify on NAIC SBS
- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
Required disclosures. Lendmire (NMLS# 2371349) operates as a licensed mortgage broker, not a direct lender or depository. The discussion in this article is general in nature and should not be relied upon as financial, legal, or tax advice — every investment scenario is unique and should be reviewed by a qualified professional. Any loan inquiry is subject to lender underwriting, and this article is not a commitment to lend or a guarantee of approval. Mortgage rates, loan terms, and program guidelines vary by borrower, property, and state, and may change without notice. Equal Housing Opportunity. Verify licensure at NMLS Consumer Access.