Yes, you can get a mortgage without tax returns. Federal ability-to-repay rules do not require a lender to use tax returns. They require the lender to make a reasonable, good-faith determination that you can repay, and the CFPB’s compliance guide says lenders may use a wide variety of sources, including bank statements. For self-employed borrowers, freelancers, contractors and investors, that flexibility is what makes non-QM programs possible. This guide explains how those loans verify income, what they usually require, what they cost you in trade-offs, and which one fits your situation.
TL;DR
- A mortgage without tax returns qualifies you on other evidence: 12 to 24 months of bank deposits, a CPA-prepared profit and loss statement, 1099 income, or a rental property’s cash flow.
- Bank statement loans are built for self-employed borrowers whose write-offs push taxable income below what their business actually earns. We look for a 620 minimum credit score and 10-20% down.
- Investors can skip personal income entirely with a DSCR loan, which qualifies on the property’s rent. It is for investment property only, never a primary residence.
- Expect trade-offs: non-QM loans generally carry higher rates and tighter terms than conventional loans, and you still have to prove you can repay.
Table of Contents
- Why tax returns often understate what you earn
- The main ways to qualify without tax returns
- Bank statement loans: your deposits tell the story
- 1099 and freelancer mortgages
- DSCR loans: the property qualifies, not you
- NONI loans for foreign nationals and non-traditional borrowers
- Short-term and commercial financing
- Where owner-occupied loans are available
- What the trade-offs are
- Our perspective
- How to apply without tax returns: step by step
- Talk to a loan officer who works with self-employed files
- Other options if you are 62 or older
- FAQ
- Sources
Why tax returns often understate what you earn
Tax returns are designed to reduce your taxable income. If you run a business, you deduct vehicle costs, equipment, software, home-office space, contractors, depreciation and more. Every legitimate deduction lowers the bottom line a conventional underwriter sees, even when the money moving through your account is strong and steady.
A conventional lender starts from the tax return and works forward. Fannie Mae’s self-employed borrower guidance describes analyzing the business’s year-to-year gross income, expenses and taxable income, then evaluating the trend. Some add-backs are allowed: Fannie Mae’s profit and loss guidance lets a lender add allowable adjustments, including eligible nonrecurring items, to reported net profit. Genworth’s training material notes that underwriters may adjust for noncash expenses such as depreciation, provided the income is steady, stable, likely to continue and provable.
That works for some borrowers. It fails for others: the freelancer who deducts heavily, the owner whose income dipped in one year, the entrepreneur less than two years into the business. For them, the tax return is an accurate picture of what they paid tax on and a poor picture of what they can afford. Our guide on business income versus personal income for mortgages walks through that gap in more detail.
The main ways to qualify without tax returns
There is no single “no tax return mortgage.” Several programs exist, and they verify different things.
| Program | What replaces tax returns | Best for | Occupancy |
|---|---|---|---|
| Bank statement loan | 12-24 months of business or personal deposits | Self-employed owners, freelancers, contractors | Primary, second home or investment (see state note below) |
| 1099 loan | 1099 forms and supporting deposits | Independent contractors and consultants | Varies by program |
| DSCR loan | The property’s rental income | Real estate investors, including LLCs | Investment property only |
| NONI (no income, no asset) | Alternative evidence of ability to repay | Foreign nationals, borrowers with no documentable income | Investment property |
The sections below take each one in turn.
Bank statement loans: your deposits tell the story
A bank statement loan uses the cash flowing into your accounts to derive qualifying income. HousingWire describes non-QM products as serving entrepreneurs and independent contractors who struggle with traditional documentation, by focusing on deposit history as evidence of cash flow.
The lender does not simply count every deposit as income. Business accounts include money that goes right back out as expenses, so the underwriter applies an expense factor. At 1st Nationwide Mortgage, the standard expense factor on business accounts is 50%. With a CPA-certified profit and loss statement showing lower real expenses, it can drop to 35-40%, which raises your qualifying income.
A worked example
This is illustrative only, not an offer or a commitment to lend. Say a graphic design studio shows $240,000 in total business deposits over 12 months, after removing transfers between your own accounts and one-time deposits such as a loan or a refund.
- At a 50% expense factor, qualifying income is $120,000 a year, or $10,000 a month.
- At a 40% expense factor supported by a CPA-certified P&L, qualifying income is $144,000 a year, or $12,000 a month.
Same business, same deposits, a $2,000 monthly difference in how much payment the borrower can carry. That is why the P&L can be worth the cost of a CPA’s time. If the same owner filed a return showing $45,000 of net profit after deductions, a conventional lender would have seen far less.
Typical requirements
Requirements vary by lender. Experian notes borrowers may need a credit score of 620 or 700, at least 10% down, liquid assets and a history of self-employment. For our program:
- 12 to 24 months of bank statements
- A minimum 620 credit score
- 10-20% down, depending on the scenario
- A self-employment history we can document
- Reserves, as the scenario requires
You can read the program details on our bank statement loans page, or see the 12-month bank statement option if you want the shorter documentation window.
1099 and freelancer mortgages
If you are an independent contractor, you may receive 1099s from a handful of clients. That income is real, but your net after expenses can look thin on a return. A 1099 program uses those forms, along with deposit history, to document what you earn. Our page on 1099 mortgage loans for contractors and consultants covers it, and our article on alternative qualification criteria for freelancers explains how variable income is weighed.
Freelancers with uneven months should know how lenders read variability. Genworth’s training says declining income requires special analysis: for declining personal income the lower year may be used, while declining business income is evaluated through trend analysis. A deposit-based review looks at the whole period, so a strong stretch can offset a slow one. Our tips for variable income mortgage qualification give practical ways to prepare.
DSCR loans: the property qualifies, not you
Real estate investors have a different problem. You may own several rentals, hold them in LLCs and show modest personal income on paper because depreciation and interest wipe out your profit. A debt service coverage ratio (DSCR) loan sidesteps all that. The qualifying income is the property’s rental income, and your personal income is not part of the calculation.
Key points:
- DSCR loans are for investment, non-owner-occupied property only. We never offer DSCR for a primary residence.
- They work for LLCs, and there is no limit on the number of properties you finance.
- The minimum credit score is 640.
- The core test is whether the rent covers the property’s housing payment, including principal, interest, taxes and insurance.
Before you commit to a deal, run the numbers with our DSCR loan calculator, then see the full program on our DSCR loans page. Investors buying small multifamily should also work from a thorough multifamily inspection checklist, because condition and deferred maintenance directly affect rents, reserves and the cash flow a DSCR loan depends on.
If you buy in California or Colorado, we have local pages for San Diego DSCR loans and Colorado DSCR loans.
A note on prepayment penalties
Some investor loans carry a prepayment penalty. Availability and structure vary by state, and they are restricted in several. Any prepayment terms are confirmed at application, so ask about them early when you compare options.
NONI loans for foreign nationals and non-traditional borrowers
No income, no asset (NONI) loans exist for borrowers who cannot document income the usual way. That includes foreign nationals buying U.S. investment property, who typically have no U.S. tax returns or U.S. credit history to show. These loans are for investment property. See our NONI investment loans page, along with local pages for Hawaii and New York.
Short-term and commercial financing
Some investors need speed or financing that does not fit a standard long-term loan. Our bridge loans, hard money loans and rehab loans serve purchases and renovations where timing matters, and commercial real estate loans cover larger business-purpose properties. These are business-purpose products, available for non-owner-occupied property.
Where owner-occupied loans are available
The geography matters here, so we want to be direct. Owner-occupied programs, including owner-occupied bank statement loans, FHA, VA, USDA, conventional, jumbo, HELOC and reverse mortgage options, are available only in California, Colorado, Oregon, Washington, Texas and Idaho. Outside those states, our programs are business-purpose financing for investment property: DSCR, non-owner-occupied bank statement, NONI, bridge and commercial. If you are buying a rental or investment property anywhere in our footprint, those programs are the right place to start. You can see the consumer options on our loan programs page.
What the trade-offs are
A mortgage without tax returns is not a loophole, and it is not cheaper. Be clear-eyed about these points:
- Pricing. CNBC reports that these mortgages may come with higher interest rates and larger down-payment requirements than conventional loans, and may require a higher credit score. Non-QM loans often carry more stringent underwriting to compensate lenders for added risk. We do not quote rates in articles because they depend on your scenario.
- Down payment. Expect to put down more than the minimums on some conventional or government programs.
- You still have to prove repayment. The CFPB’s Ability-to-Repay rule requires creditors generally to consider verified income or assets, employment status, mortgage and other debt payments, debt-to-income ratio or residual income, and credit history. “No tax returns” does not mean “no verification.”
- Clean statements matter. Large unexplained deposits, frequent overdrafts and commingled personal and business funds all slow underwriting.
If your tax returns do show strong income, a conventional loan may cost less, and we will say so. The right program is the one that matches how you actually earn.
Our perspective
Most self-employed borrowers who call us are not high-risk. They are profitable owners who did exactly what their accountant told them to do: reduce taxable income. Then they meet an underwriting system that treats the result as their earning power.
We are a direct lender, so the person who reviews your file works at the lender that funds the loan. We pick the income method before we quote anything: deposits, a CPA-certified P&L, 1099s, or rental income. A few minutes on that choice often changes the outcome more than any amount of paperwork. We also tell borrowers when a bank statement loan is not their best path. If a conventional loan fits, use it.
The one habit we recommend to every self-employed borrower: run your business and personal finances through separate accounts at least 12 months before you apply. Clean deposits are the single most useful document you can give an underwriter.
— Christopher Arco, NMLS #1281
How to apply without tax returns: step by step
- Decide your occupancy. Primary residence, second home or investment property. This determines which programs are available in your state.
- Gather 12 to 24 months of statements. Use the accounts where your income actually lands. Mark transfers and one-time deposits.
- Get a CPA-certified P&L if your expenses are lower than 50%. It can support a lower expense factor.
- Check your credit. Our bank statement program starts at 620, and DSCR at 640.
- Plan your down payment and reserves. Ten to twenty percent down for bank statement loans, depending on the scenario.
- Talk to a loan officer before you shop for a house. A direct conversation about your income method saves time later.
Talk to a loan officer who works with self-employed files
We specialize in non-QM and alternative income mortgages. Dedicated loan officers personally handle your file rather than passing it through a call center, and we are BBB A+ rated. Whether you need a bank statement loan, a DSCR loan for a rental or a NONI loan, tell us how you earn and we will tell you which program fits.
Start on our bank statement loans page, or review the full mortgage without tax returns guide. If you want to understand the verification step first, read how mortgage lenders verify self-employed income.
Other options if you are 62 or older
Homeowners 62 and older in California, Colorado, Oregon, Washington, Texas and Idaho may ask about a reverse mortgage instead. Do not assume it skips income review. For HECM reverse mortgages, HUD’s financial assessment guidance requires lenders to assess your capacity to meet financial obligations, which includes documenting income and verifying that it is legally derived and properly reported on tax returns when required. Property charges such as taxes and insurance remain your responsibility. Learn more on our reverse mortgage information page.
FAQ
Can I get a home loan without tax returns if I just started freelancing?
It is harder, but possible in some cases. Most bank statement programs want 12 to 24 months of deposits, so a very new business usually has less to work with. If you came from a similar field as an employee, talk to a loan officer about how that history can be considered.
Do I need a CPA to qualify for a bank statement loan?
Not always. The standard expense factor on business accounts is 50% without one. A CPA-certified profit and loss statement can lower that factor to 35-40%, which raises your qualifying income, so it is often worth the cost.
Can I use a mortgage without tax returns to buy my primary home in any state?
No. Owner-occupied programs are available only in California, Colorado, Oregon, Washington, Texas and Idaho. In other states, we offer business-purpose financing for investment property, such as DSCR, non-owner-occupied bank statement and NONI loans.
Does a DSCR loan work for my own home?
No. DSCR loans are for investment, non-owner-occupied property only. The property’s rental income qualifies the loan, not your personal income, so it cannot be used for a primary residence.
Are these loans more expensive than conventional mortgages?
Often, yes. CNBC notes that such loans may have higher rates and larger down-payment requirements. Your actual terms depend on your credit, down payment and documentation, and they are confirmed at application.
Sources
- CFPB Ability-to-Repay and Qualified Mortgage small entity compliance guide
- Federal Register: Ability-to-Repay and Qualified Mortgage Standards
- Fannie Mae: Underwriting factors for a self-employed borrower
- Fannie Mae: Analyzing profit and loss statements
- Genworth: Self-employed borrower basics training
- HousingWire: What are non-QM loans and who are they for?
- Experian: What is a bank statement loan?
- CNBC: How to handle unverifiable income when applying for a mortgage
- HUD: HECM financial assessment and property charge guide
For illustration only. Not a commitment to lend. NMLS #1281. Equal Housing Lender.