Can You Get a Self-Employed Mortgage Without Two Years of Tax Returns?

The Quick Read: Yes, you can, because two years of returns is a habit of conventional loans rather than a universal rule, and your route depends on whether you are missing history, missing returns, or holding returns that understate what your business actually earns. A bank statement loan is reviewed on documented income under the applicable program, subject to lender guidelines. A DSCR loan on a rental qualifies primarily on property-level rental income covering the payment, subject to lender guidelines.

• A bank statement loan typically reads 12 months of deposits instead of traditional personal-income documentation.
• On a primary residence purchase or rate-term refinance, select lenders in Lendmire’s network go up to 90% LTV.
• On a rental you do not live in, a DSCR loan skips personal income and looks at the property’s rent.
• “No returns” never means “no paperwork.” Credit, assets, and the appraisal all still get reviewed.
• The trade-off is real: expect more cash down and less favorable pricing than a conventional loan.

Why Do Lenders Ask for Two Years of Returns?

Lenders want proof that your income is steady, and two filed returns are the easiest evidence to read. A single year can be a fluke. Two years show a trend. The return also gives the lender a third-party record to check your numbers against.

Three phrases get mixed up, so separate them now:

• Two years of returns means two filed tax years on paper.
• Two years self-employed means you have run the business that long, whether or not both years are filed.
• Returns that understate income means you have the history, but write-offs shrink the number a lender sees.

Each one has a different fix. That is why a blanket answer to the title question fails. A new freelancer, a ten-year contractor with aggressive deductions, and a landlord buying a duplex are three different borrowers. Nobody serves all three with the same loan.

Key Terms Defined

Bank statement loan: a mortgage that uses your deposit history, rather than your traditional personal-income documentation, to calculate qualifying income.

DSCR (debt service coverage ratio): the property’s monthly rent divided by its monthly obligation, which covers principal, interest, taxes, insurance, and any HOA dues.

LTV (loan-to-value): the loan balance as a percentage of the property’s value.

Expense factor: the share of your deposits a lender treats as business costs before counting the rest as income.

Non-QM: short for non-qualified mortgage, a loan that sits outside the standard agency box and sets its own documentation rules.

Asset depletion: qualifying from your liquid assets instead of a paycheck or deposits.

Reserves: cash left in the bank after closing, usually measured in months of the housing payment.

Which Situation Are You In?

Start by naming your gap. The table shows the usual route for each profile, though every file is underwritten individually.

Two rows deserve a second look. If you have filed nothing yet, a lender can still read 12 months of deposits. If you have two clean returns but heavy write-offs, the returns hurt you more than they help. Your deposits tell the truer story.

What Do Conventional Loans Allow With a Shorter History?

Conventional loans bend a little, but not much. Fannie Mae’s announcement SEL-2023-09 sets two years of self-employment earnings as the default. It permits less than 24 months only when signed personal and business returns show at least 12 months of income from the current business. It also allows one year of returns when the business is five years old and you have held 25% or more ownership for those five years.

Read that closely. Even the exception wants returns. It does not help you if you have filed none. And it governs agency-eligible loans only, so it has no bearing on bank statement or DSCR files.

How Does a Bank Statement Loan Replace Tax Returns?

The lender reads your deposits instead of your return. It averages them over the statement window, applies an expense factor, and treats the result as qualifying income. Across the wholesale network Lendmire places files with, 12 months of business or personal statements is the typical window.

Expense factors are lender-specific. Some programs use a fixed ratio. Some accept a ratio prepared by your accountant, which can help if your real costs run below the default. Nobody can promise you a universal formula, so treat any flat number you see online with suspicion.

The leverage depends on what you are buying and how you will use it. Here is how it typically looks across select lenders in the network, subject to lender guidelines:

• Primary residence, purchase or rate-term refinance: up to 90% LTV. Stronger files earn the top of that range.
• Primary residence, cash-out: up to 80% LTV with a fixed expense ratio, or 75% with an accountant-prepared ratio.
• Second home, cash-out: up to 75% LTV, depending on loan size and credit.
• Investment property, cash-out: tops out around 75% LTV.
• Investment property, purchase: varies by lender, so ask before you assume a number.
• Asset depletion on a primary residence: up to about 80% LTV.

Loan sizes generally run from $125,000 to $3,500,000. Reserves commonly land around six months of the housing payment. Terms follow each lender’s program sheet, so confirm the length the program sets and don’t assume the longer structures you see on rental loans.

Occupancy also decides your paperwork. A bank statement loan on a home you will live in, including a second home, is a consumer mortgage, so standard consumer disclosure rules apply, including TRID. A bank statement loan on a rental you will not occupy, including a short-term rental, is business-purpose and exempt from TRID. Know which one your property is before you apply.

What Does the Deposit Math Look Like?

Picture a self-employed contractor with steady business deposits all year. After equipment, fuel, and depreciation write-offs, her return shows taxable income that is a small slice of what actually came in. A returns-based lender sees only that slice.

A bank statement lender starts from the deposits. It applies its expense factor and counts what remains. Her qualifying income can land well above the number on the return, because the write-offs that lowered her tax bill do not all represent cash that left the business.

The same logic cuts the other way. Lumpy deposits, large transfers between your own accounts, or a sudden spike late in the window all pull the average down or raise questions. The lender is averaging a pattern. A clean pattern wins.

Write-offs are legitimate, and they are the reason this loan exists. Tax treatment can depend on how the funds are used and how the property is held; borrowers should keep clear records and speak with a qualified tax professional before relying on any deduction.

What If You’re Buying a Rental?

For a rental you will not live in, the cleanest route often skips your personal income altogether. DSCR loans are designed for non-owner-occupied investment properties. Because they are business-purpose investor loans, they are reviewed differently from a standard owner-occupied mortgage.

The lender divides the property’s rent by the full monthly obligation. On a purchase, the appraiser’s rent schedule sets the rent, not your own rental history. A ratio of 1.00 means the rent just covers the payment. Select programs set 1.00 as a floor, and plenty of files clear it by a comfortable margin.

Weak coverage is not a dead end. Programs below 1.00 are available through select lenders in the network, though LTV and terms adjust. If the property still will not carry itself, a bank statement or asset-based route may fit better.

Here is what a DSCR file still checks, so nobody mistakes it for a free pass:

• Your credit.
• The appraisal and rent schedule.
• The source of your down payment.
• Reserves.
• ID.
• Entity documents, if you buy through an LLC, subject to lender program eligibility.

Many self-employed investors choose this lane because depreciation and write-offs keep taxable income low. A DSCR file does not care about that gap. Lendmire’s complete DSCR loans guide covers the full mechanics, including how the coverage number is calculated.

Which Document Replaces Which?

Trade-press explainers, including Bankrate’s non-QM guide, describe four common alternative paths: bank statements, 1099 income, asset-based qualification, and DSCR for rental investors. Here is how they compare.

Program availability varies by lender here. Some programs accept 1099s alone, and others do not. Ask your broker which ones apply to your file before you gather documents.

What About Owner-Occupied Loans Without Returns?

Owner-occupied loans still need verified income. The CFPB’s ability-to-repay compliance guide says lenders can verify income with traditional personal-income documentation, bank statements, or other reasonably reliable third-party records. Bank statements are an accepted source.

So the idea that you can simply state your income and move on is wrong for a home you will live in. Self-reported numbers do not count. Third-party records do.

What’s the Trade-Off?

You pay for flexibility. Alternative documentation typically means a larger down payment and pricing that is less favorable than an agency loan. The lender is taking on a file that does not fit the standard box, and the terms reflect that.

Reserves matter more too. Roughly six months of the housing payment in the bank is common. That is a real cash requirement on top of your down payment.

The exit is worth knowing. Many borrowers use a bank statement loan as a bridge, then refinance into a conventional loan once they have two years of returns that support a conventional file. Whether that works depends on your future income, property value, and credit. It is a plan, not a promise.

Should You Wait or Buy Now?

This one is a genuine toss-up for many borrowers, and the honest answer depends on cost versus opportunity.

Waiting makes sense if:

• You are only a few months from a second return, and your income on paper is strong.
• The property is not time-sensitive.
• You would rather hold cash than accept a higher cost of borrowing.

Buying now makes sense if:

• Your returns understate your real income, so waiting will not fix the gap.
• The deal is good enough to justify the higher cost.
• You have the reserves and down payment, and you plan to refinance later.

If your returns will never show your real income, waiting only delays the same conversation.

How Do You Prepare, and Why Do Files Stall?

Prep takes a few months of discipline, not a heroic effort. Start here:

• Separate your accounts. Run business deposits through a business account and personal spending through a personal one. Commingled funds make the average hard to read.
• Explain large transfers between your own accounts before the lender asks.
• Document your down payment. Funds that sit in your account for a stretch are easier to source than a sudden deposit.
• Gather entity papers if you buy through an LLC.
• Check your credit and clean up anything fixable.
• File or extend your most recent return so your records are consistent, even if the loan does not rely on it.

Common reasons files stall:

• Thin or erratic deposits.
• A recent change in the business.
• Unexplained transfers.
• Reserves that fall short.
• A rent schedule that does not support the loan.

None of these are fatal. They are fixable before you apply, which is the point of preparing.

Next Step

If you are self-employed and want to see how the numbers work, Lendmire can help you compare bank statement loan options based on your deposits, the property, credit profile, leverage, and your goals. Call 828-256-2183 or request a quote through the site. Lendmire is a broker arranging financing through select lenders, not a commitment to lend, and every file is underwritten individually.

For current guidelines and terms, see Lendmire’s self-employed mortgage programs page.

About Lendmire

As a mortgage broker (NMLS# 2371349), Lendmire helps self-employed and high-net-worth borrowers in 16 states qualify on bank statements, a profit-and-loss statement, 1099s or liquid assets instead of tax returns, through wholesale lenders. Lendmire is never the lender; program terms are set by the lender and its guidelines. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.

References

1. Fannie Mae SEL-2023-09

2. Bankrate: Non-QM Loans

3. CFPB Ability-to-Repay and Qualified Mortgage Small Entity Compliance Guide