Loan program

Self-Employed & Non-QM Loans in NC, SC & GA

If you work for yourself and your tax returns understate what you really earn, a standard loan can lowball you. There are programs that qualify you on your actual cash flow instead. Here is how underwriters read self-employed income, what the non-QM alternatives look like, and how to decide which path costs less for you.

How it works

How it works.

For a standard loan, underwriters use the net income on your last two years of returns, plus certain add-backs like depreciation, depletion, and some one-time expenses, averaged over 24 months. When heavy write-offs make that number too low, we can shop non-QM options: bank statement loans (using 12 to 24 months of deposits and an expense factor instead of your returns), profit-and-loss loans (a CPA-prepared P&L carries the file), 1099-only programs, and asset depletion (turning a large nest egg into qualifying income). These are for the right situation, and we pick the one that fits.

How underwriters read your tax returns

For sole proprietors, underwriters start with Schedule C net profit. For S corporations and partnerships, they look at your K-1 income and, if you own 25% or more, the business return itself. Depreciation, depletion, and certain amortization get added back because they are not cash out of pocket. If income dropped from one year to the next, the lower year may be used, or the lender may ask why.

If your returns show enough income, a standard conventional or FHA loan usually costs less than non-QM. That is why I always start by reading your returns the way an underwriter would before we look anywhere else.

What non-QM means

A qualified mortgage (QM) meets specific federal standards, including documenting income in traditional ways. Non-QM loans still require the lender to verify you can repay, but they can use alternative documentation. They are offered by private lenders, so terms vary a lot, and rates and down payments are typically higher than conventional loans. Some borrowers use non-QM to buy now and refinance into a conventional loan later once their returns show more income, which depends on future rates and qualifying.

Choosing between bank statements, P&L, and 1099

Bank statement loans suit owners with steady deposits. The lender applies an expense factor, or uses a CPA letter, to estimate income from deposits. P&L programs suit businesses with a CPA who can prepare and attest to a profit and loss statement. 1099 programs suit contractors paid on 1099s without large business expenses. Asset depletion suits retirees or investors with significant liquid assets but little monthly income.

Step by step

How the process works, start to finish.

1. 1

   Read your returns first

   I review two years of personal and business returns the way an underwriter would to see if a standard loan works.

2. 2

   Compare paths

   If the standard path falls short, we compare bank statement, P&L, 1099, and asset depletion options side by side.

3. 3

   Gather the right documents

   Each path needs different paperwork. We collect only what your chosen program requires.

4. 4

   Lender underwriting

   Non-QM lenders review income calculations manually. I stay on top of questions so the file keeps moving.

5. 5

   Appraisal and closing

   The appraisal and closing work like any other loan, with a local closing attorney.

FAQ

Common questions: Self-Employed / Non-QM.

• Do lenders use my gross or net income if I am self-employed?

  Net income, plus certain add-backs like depreciation, on a standard loan. Bank statement loans look at deposits with an expense factor instead.

• Can I qualify with only one year self-employed?

  Sometimes, if you have a longer track record in the same field, such as working as an employee in the same line of work before going out on your own. It is lender-specific.

• What is a bank statement loan?

  A non-QM mortgage that qualifies you using 12 to 24 months of personal or business bank deposits instead of tax returns. The lender applies an expense factor or uses a CPA letter to estimate your income.

• Are non-QM rates higher?

  Usually, yes. Non-QM loans carry more risk for lenders and are priced higher than conventional loans. Down payment, credit, and reserves all affect pricing. I never quote rates on this site because they change daily.

• How much down do I need for a bank statement loan?

  It varies by lender and credit, but many bank statement programs start around 10% down, with better terms at higher down payments and scores.

• Should I write off less so I can qualify for a mortgage?

  That is a tax decision for you and your CPA. I can show you how lenders will read your returns under different scenarios so you can make an informed choice with your tax pro.

• Can I refinance out of a non-QM loan later?

  Many borrowers do once their tax returns support a conventional loan. It depends on future rates, your income, and equity, and some non-QM loans have prepayment penalties, so check the terms.

• What is an asset depletion loan?

  A loan that converts a portion of your liquid assets, like savings or investment accounts, into qualifying monthly income. It suits retirees and investors with significant assets but limited paycheck income.

Sources: Fannie Mae Selling Guide (self-employment income, Form 1084); FHA Handbook 4000.1; CFPB Ability-to-Repay/Qualified Mortgage rule; lender non-QM program guidelines.

Last reviewed September 2026 by Keith Lopez, NMLS #2814077.

From the blog

Articles about Self-Employed / Non-QM

• Self-Employed & Investors Self-Employed Bank Statement Loans in North Carolina: When Tax Returns Understate Your Cash Flow Tax returns that understate your cash flow do not have to block your path to homeownership. Bank statement loans offer a documented alternative for self-employed buyers in North Carolina.
• Self-Employed & Investors DSCR Loans for Carolina Rental Investors, in Plain English A DSCR loan qualifies on the rental property's income, not your personal tax returns. Here's how Carolina investors use them to grow a portfolio.
• Self-Employed & Investors Self-Employed in the Carolinas? How Underwriters Actually Read Your Tax Returns Self-employed and worried you can't qualify for a mortgage in NC or SC? Here's how underwriters really read your tax returns, and your options when they understate your income.

View all articles →