How to Get a Mortgage in Virginia When You’re Self-Employed

The Quick Read: Self-employed borrowers get mortgages by choosing the documentation path that matches how their income shows up on paper, and the right path depends on whether the property is a home or a rental. Virginia has no special self-employed rule, so the same national mechanics apply. Traditional personal-income documentation, 12 months of bank statements, or the property’s own rent can each carry a file, subject to lender guidelines.

• Write-offs that lower your tax bill also lower income on a tax-return file.
• A bank-statement loan is reviewed on documented income under the applicable program, using deposit averages.
• Typical leverage through select lenders in Lendmire’s wholesale network runs up to 90% LTV on a primary-residence purchase or rate-term refinance.
• A rental purchase can often skip the personal-income calculation and run on the property’s rent.
• Occupancy decides which rules apply, so settle that before you pick a program.

Lendmire is a mortgage broker. It arranges financing through select lenders in its wholesale network and does not lend or approve loans itself. Everything below is subject to lender guidelines and is not a commitment to lend.

Why Does Your Income Look Smaller on Paper?

Your qualifying income shrinks because standard underwriting starts from net income on the tax return, not from what your business deposits. Every deduction you took to cut your tax bill comes off the number a lender can use.

A lender on the tax-return path takes net business income and adds back non-cash items such as depreciation. It then typically averages two years. If income fell, the lower year often becomes the working figure. If you own a meaningful share of the business, expect a request for business returns as well. Gross revenue does not count. Net does.

A business can be healthy and still look thin. A contractor who writes off a truck, equipment, a home office and a retirement contribution may clear strong cash flow and report modest income. Both statements are true. Only one of them is the lender’s starting point.

The rules are not designed to shut self-employed borrowers out. The federal consumer-finance regulator’s compliance guide for the repayment-capacity rule says income does not have to be full-time or salaried, and that self-employment and irregular income can be considered. The lender must verify whatever income it relies on. It does not have to verify income it ignores. That flexibility is why several documentation paths exist.

Key Terms Defined

Qualifying income: The figure a lender uses to size your loan, which can differ sharply from your gross receipts.

Bank-statement loan: A non-QM mortgage that is reviewed on documented income under the applicable program, drawn from deposit averages instead of the tax return.

Non-QM: A loan that falls outside the federal qualified-mortgage definition. It still verifies something. It is not an unverified loan.

DSCR: Debt service coverage ratio, meaning a rental’s monthly rent compared with its full monthly housing cost.

PITIA: Principal, interest, taxes, insurance and any association dues, the full monthly housing cost.

Occupancy: How you will use the property: primary residence, second home, or non-owner-occupied rental.

How Underwriting Treats Self-Employment, Step by Step

Underwriting follows one of three paths. Which one you use depends on how your income reads on paper and what you are buying.

1. Tax-return path. The lender builds income from your returns, adds back non-cash items, and averages the years. This is the baseline that most buyers try first, and it suits borrowers with steady, well-reported income. It works poorly for heavy write-offs, a recent income drop, or a business under two years old.

2. Bank-statement path. Qualifying income comes from deposits over a lookback window, not from the return. Across the wholesale network, the standard program uses 12 months of business or personal statements. The lender averages deposits and applies an expense factor, and that factor varies by lender, so no one formula applies. Transfers between your own accounts and unexplained deposits get stripped out. What remains is the income that counts.

3. Property-income path. On a rental purchase, a DSCR loan compares the property’s rent with its monthly housing cost. Rent comes from an in-place lease or from the appraiser’s market-rent schedule (Form 1007 for single-family, Form 1025 for two to four units). Your tax strategy does not drive the number.

A bank-statement loan verifies deposits. A DSCR loan verifies rent and the property.

What Structures Exist for Owner-Occupied Homes?

For a home you will live in, bank-statement programs reach up to 90% LTV on a primary-residence purchase or rate-term refinance through select lenders. Stronger files earn the top of that range. Weaker credit or a larger loan usually pulls leverage down.

Loan sizes in the network generally run from $125,000 to $3,500,000. Reserves commonly sit around six months of the housing payment. Reserve documentation is its own item, and files stall when the account used for reserves is the same one with unexplained deposits.

Cash-out on an owner-occupied home is capped lower than a purchase. On a primary residence or second home, cash-out typically tops out at 80% LTV with a fixed expense ratio, or 75% when an accountant prepares the ratio. Do not mix the 90% purchase figure into a cash-out plan. Lendmire’s piece How to Refinance Your Home When You’re Self-Employed covers that side in detail.

There is an alternative for borrowers with large liquid balances and uneven deposits. Asset-depletion qualification uses liquid assets in place of deposit history and runs to about 80% LTV on a primary residence. Whether it fits depends on the lender and the file.

Term length follows each lender’s program sheet. Treat any promise of an extended bank-statement term with caution.

What About a Rental Property?

A rental purchase is where self-employed investors usually switch lanes. Because the loan is business-purpose, qualification runs on the property’s rent, and your write-offs stop mattering to the number. DSCR loans are designed for non-owner-occupied investment properties, and they are reviewed differently from a standard owner-occupied mortgage.

The regulatory reason is simple. The Federal Register notice for the ability-to-repay rule says business-purpose loans fall outside that rule and treats investment-purpose loans as business-purpose.

Personal debt-to-income does not gate these files the way it gates a conventional one. The property has to carry itself. Outcome drivers are the rent against the full monthly obligation, credit profile, down payment and equity, reserves, and entity documents if the loan closes in an LLC, subject to program terms.

Sub-1.00 coverage is available through select lenders in the network, with LTV and terms adjusting for it. Leverage on a bank-statement loan for a rental purchase varies by lender, so investor-focused leverage questions belong on the DSCR side. If the rental is a cash-out refinance, the bank-statement ceiling tops out around 75% LTV on an investment property.

The complete DSCR loans guide covers the investor program in full.

Where Does the General Rule Break?

Most of the confusion sits in four edge cases. Know which one you are in before you apply.

Business-purpose is not the same as exempt. Exemption depends on the loan’s primary purpose. Compliance Alliance, summarizing the Regulation Z commentary, says an owner-occupied rental is deemed business-purpose on a purchase only with more than two units, and on an improvement only with more than four. A duplex you live in is not a clean investor loan.

Owner-occupied means consumer mortgage. A primary residence or second home is a consumer loan, and TRID disclosures apply. A bank-statement loan on a non-owner-occupied rental, including a short-term rental, is business-purpose and TRID-exempt. Do not mix the two in your planning. Even on a home, a bank-statement program must still document your ability to repay.

New business owners. The tax-return path wants about two years of history. A DSCR file does not look at how long you have been self-employed.

Declining income. On the tax-return path the lower year often wins. On deposit-based files, trailing statements matter more, so a recent dip shows up in the average. It still helps to know which window the lender uses.

One more point about the federal rule. The CFPB’s assessment report on the ability-to-repay rule found that self-employed borrowers who were not agency-eligible had difficulty with the older income-documentation requirements, though approval rates for that group fell only slightly, by two percentage points. The rule did not close the door. It pushed more files toward alternative documentation.

Which Path Should You Try First?

Start with the path that gives you the largest qualifying income for the least cost, and move down only when the numbers fail.

Picture an owner of a small trucking company buying a primary residence. Her returns show low net income after equipment depreciation, but 12 months of business deposits are strong. A bank-statement file may support a larger loan than the return does, with the lender applying its own expense factor. If she also wants a rental, the rental should be run separately, on its own rent.

Say you run a consulting practice and want a fourplex. Your personal returns are thin, but the building’s rents cover its full monthly obligation with room to spare. That file reads on the property, and coverage near 1.2x gives a lender less to question. Rent evidence still matters. A thin lease file is where these deals stall.

Where Do Self-Employed Files Get Stuck?

Files stall on preventable documentation gaps, not on income alone. The common ones are predictable.

• Commingled accounts. Personal spending running through the business account makes the deposit average hard to read.
• Unexplained deposits and transfers. Anything the lender cannot trace gets removed from the income figure. A large cash deposit with no paper trail is the usual culprit.
• New debt before closing. A fresh vehicle loan or credit line changes the file after it is built.
• Entity paperwork. Sole proprietors, single-member LLCs, S-corps and partnerships each produce different documents. Mismatched names between the entity, the bank account and the property title create delays.
• Reserves documentation. The reserve account needs statements the lender can use.
• Appraisal and rent evidence on rentals. A missing market-rent schedule or an unsigned lease leaves the coverage number unsupported.

Across the wholesale network, the cleanest self-employed files share one habit. The borrower builds the document set before choosing a program, then lets the documents point to the program, not the reverse.

Tax treatment can depend on how the funds are used and how the property is held; investors should keep clear records and speak with a qualified tax professional before relying on any deduction.

Does Virginia Change Anything?

Virginia has no separate self-employed mortgage rule behind this article. The federal framework applies in every state, and the three paths work the same way here. What differs by region is the property, not the paperwork. Rural parcels can be harder to appraise and rent-check than a suburban rowhouse, and rent evidence on a thin-comp rental takes more care.

Do not confuse the state with the VA loan benefit. They are unrelated. Consumer mortgage licensing for Lendmire’s alternative-documentation lane covers 16 states, so confirm availability for your location before you build a plan around it.

Reach the team at 828-256-2183 or request a quote through the Lendmire quote page.

About Lendmire

Lendmire, NMLS# 2371349, is a mortgage brokerage focused on investor financing, arranging DSCR loans in 40 states plus Washington, D.C. — 41 markets total. Qualification is based on the property’s income rather than personal income documentation, subject to lender guidelines, making it a fit for LLC-held rentals and scaling portfolios. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.

References

1. CFPB ATR/QM Small Entity Compliance Guide

2. Federal Register, Ability-to-Repay final rule

3. Compliance Alliance, Regulation Z and Investment Properties