How to Get a Self-Employed Mortgage Loan in Florida: Ultimate Guide

We have many exciting loan products designed specifically for self-employed borrowers. You can purchase or refinance a home. Without providing a single tax return.

Self-employed mortgage loans are a niche area. If you’re self-employed, getting a mortgage (whether to purchase or refinance) is challenging. Traditionally, underwriting guidelines require 2 years of tax returns, paychecks, and other proof of steady income that self-employed individuals typically lack.

But there’s hope with alternative non-QM lenders. These special lenders offer creative mortgage solutions for the self-employed scenario, with more relaxed guidelines when it comes to income proof.

Further below, we explore the top 6 creative mortgage loans for self-employed individuals in Florida.

QM versus non-QM home mortgage for self-employed

First, a little bit of background. Self-employed borrowers often need special loans called non-QM loans (defined below) because these flexible lending solutions accommodate their unique income structures and financial circumstances, which traditional mortgage products may not adequately cater to.

Qualified mortgages (QM)

In the aftermath of the 2008 U.S. housing market crash, the Dodd-Frank Wall Street Reform and Consumer Protection Act was born. The law requires mortgage lenders to scrutinize a borrower’s “ability to repay” based on eight underwriting guidelines:

Current or reasonably expected income or assets;
Current employment status;
The monthly payment on the covered transaction;
The monthly payment on any simultaneous loan;
The monthly payment for mortgage-related obligations;
Current debt obligations, alimony, and child support;
The monthly debt-to-income ratio (DTI); and
Credit history.

Lenders who strictly follow those guidelines are presumed to have complied with the ability-to-repay requirement and their mortgages are given safe harbor as “qualified mortgages” (QM).

Non-qualified mortgages (Non-QM): mortgages for self-employed

The guidelines for QM loans can be quite strict, especially for self-employed borrowers. For example, under guideline #7 for debt-to-income ratio (DTI), you must prove your DTI is less than 43%.

These limitations led to the creation of “non-qualified mortgages” (non-QM). Non-QM lenders are also required to assess your ability to repay, but they do so in a more relaxed way. For example, some non-QM lenders accept a DTI as high as 50% or even 55%.

Because non-QM lenders do not strictly adhere to the 8 ability-to-repay guidelines, their loans do not receive the presumption of safe harbor compliance. Therefore, traditional lenders and banks refrain from offering these products.

When it comes to a home mortgage for self-employed borrowers, a non-QM lender understands your unique circumstances and is your best bet for getting approved.

Will I get approved for a mortgage if I’m self-employed?

Yes, securing a mortgage as a self-employed individual is possible, especially with the right lender. Non-QM lenders offer relaxed guidelines, including no requirement for tax returns, higher allowable debt-to-income ratios, and alternative income verification methods. Finding such a lender significantly boosts your chances of approval.

Non-QM lenders understand the unique financial circumstances of self-employed individuals. They recognize that traditional documentation may not fully reflect your income and ability to repay. Hence, they offer alternative methods of income verification, such as bank statements, which can provide a more accurate picture of your cash flow.

Moreover, these lenders are more flexible with debt-to-income ratios, understanding that self-employed individuals often have higher expenses related to their business. They also don’t require tax returns, making the application process less daunting.

With these more accommodating guidelines, your path to the closing table can be smoother and more straightforward.

Is it hard for a self-employed person to get a mortgage?

While obtaining a mortgage as a self-employed individual can present unique challenges, it is not necessarily hard. The key lies in understanding the specific requirements and finding a lender who specializes in self-employed loans. These lenders offer flexible guidelines and understand the unique financial landscape of self-employed individuals.

The first hurdle for self-employed individuals is often proving income. Traditional lenders typically require the last two years of tax returns, W-2s, and pay stubs, which may not accurately reflect the income of a self-employed person. However, lenders specializing in self-employed loans often accept alternative forms of income verification, making it easier for self-employed individuals to demonstrate their earning capacity.

Additionally, these specialized lenders often have more flexible debt-to-income ratio guidelines. While traditional lenders may reject applications with high debt-to-income ratios, lenders catering to the self-employed understand that this ratio can be skewed for business owners and freelancers. They are often more willing to consider the overall financial picture rather than relying solely on this ratio, further easing the mortgage approval process for self-employed individuals.

Why do self-employed borrowers require creative non-QM self-employed home loans?

Self-employed borrowers often require creative non-QM home loans due to their unique income structures. Traditional lenders’ rigid requirements, including at least two years of tax returns and W-2s, may not accurately reflect their financial health.

Here are some common self-employment scenarios that are well-suited for non-QM loans:

Volatile income and non-recurring expenses;
Multiple income sources;
Earnings through commissions and other hard-to-document income sources;
Seasonal and gig income;
Gaps in earnings;
Low historical average income despite recent improvement;
Lack of consistent income despite good credit history, significant savings, and access to gift funds.

Borrowers in these scenarios are typically unable to satisfy the stricter QM loan requirements.

By contrast, non-QM lenders offer self-employed home loans with less stringent guidelines.

Why are self-employment home loans in Florida on the rise?

The rise in self-employment home loans in Florida is not surprising. The state has seen a significant increase in the number of self-employed individuals and small businesses in recent years. This growth has been fueled by the state’s favorable business climate, including low taxes and a thriving tourism industry, which offers ample opportunities for entrepreneurs.

Florida self-employed mortgage loan requirements

Here are some of the key self-employed mortgage loan requirements:

Income verification: While traditional lenders often require the two most recent tax returns and W2s, non-QM lenders accept alternative forms of income verification. This includes documents like bank statements, profit and loss statements, and CPA letters. Other non-QM lenders do not require income verification at all (under the no-ratio program).
Credit score: A good credit score can significantly improve your chances of securing a mortgage loan. The specific score required can vary between lenders but expect to have a minimum credit score of 660. The higher your credit score, the higher your maximum LTV will be, and the lower your interest rate will be.
Debt-to-income ratio: Lenders will look at your debt-to-income ratio to assess your ability to repay the loan. Non-QM lenders often have more flexible mortgage requirements for self-employed borrowers and may accept higher ratios than traditional lenders (e.g., 50-55% vs. 43%). Other non-QM lenders do not have any DTI requirements at all (under the no-ratio program).
Down payment: The amount required can vary, but a larger down payment can improve your chances of approval.
Reserve assets: The underwriter will require you to have a certain amount of reserve assets, post-closing, to make your monthly mortgage payments. These are funds that you can access in case of financial hardship, such as savings accounts, stocks, or retirement accounts.

The self-employed mortgage requirements vary between lenders and loan programs, so it’s important to do your research and speak with a mortgage broker or loan officer to understand what is needed.

Mortgages for self-employed

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Home loans for the self-employed in Florida: what are your options?

Not all paths to purchasing or refinancing involve providing a tax return or a W-2 for the most recent two years. Here are the top 6 creative home loans for the self-employed.

No-Ratio Program

This program is called “no ratio” for one simple reason: your debt-to-income ratio is not a factor.

This niche loan stands out from all other loan types. It is a game-changer, a one-of-a-kind program that is only offered by a few non-QM lenders in the U.S.

Its most important feature is its lack of income and employment requirements. This program is available for both purchase and refinance.

Who is this program for?

The no-ratio program is best suited for self-employed borrowers who:

Have a high debt-to-income ratio (DTI);
Have a good credit history; and
Can accept a lower loan-to-value ratio (LTV).

To make up for the high DTI, which is common among self-employed, lenders rely on the borrower’s credit score to demonstrate their ability to repay and lower LTV to minimize their risks.

You can compute your DTI by dividing your total monthly debt (which includes the proposed carrying costs of the subject property and the liabilities reflected in your credit report) by your gross monthly income.

For a purchase loan, the LTV is computed by dividing the loan amount by the property’s appraised value or contract price, whichever is lower. For refinances, the LTV is the ratio of the loan amount and the property’s appraised value.

How do you prove your income and employment?

Under the no-ratio program, you do not have to submit any proof of income or employment at all. It’s simple:

Employment is not stated on the application.
Income is not stated on the application.
Income documentation is not required.

The lender will not require your tax returns, tax transcripts (4506-Ts), or employment verification.

You simply leave the income and employment sections blank in your loan application. Your DTI will not be calculated either; hence, the name “no ratio.”

What LTVs are available?

The no-ratio program typically offers the following LTVs:

Purchases and rate-and-term refinances: Up to 80% LTV
Cash-out refinances: Up to 75% LTV

What are the maximum loan amounts?

If you need a super jumbo loan, the no-ratio program offers up to $6M or more, allowing you to purchase or refinance luxury properties in the hottest markets.

What property and occupancy types are allowed?

No matter what type of home, this loan program can be used to purchase or refinance several types of properties, including:

Single-family residences;
Townhomes;
Planned-unit development (PUD)
2- to 4-unit properties;
Condominiums (including non-warrantable condos); and
More exotic types (e.g., rural, modular, log homes).

These properties must be owner-occupied (primary residence and second/vacation home) to be eligible for the no-ratio program. If you would like to purchase or refinance an investment property and enjoy the same benefits as the no-ratio program, you would apply under the DSCR program instead.

What is the minimum credit score needed?

To qualify, you must have a minimum score of 660 or 680, depending on the lender. Of course, the higher your credit score is, the better the terms and offers you will receive.

Curious about the No-Ratio Program?

For more information on this game-changing loan program, click below to view our page on loans without income verification.

Learn More

Bank Statement Program

The bank statement program is the most common self-employed program that nearly all non-QM lenders offer. As a result, this loan comes with a wider range of terms to suit the varying circumstances that self-employed borrowers face.

Who is this program for?

A bank statement mortgage is suited for self-employed borrowers who have sufficient income to meet their monthly mortgage payments but unfortunately do not have tax returns reflecting this income. So, lenders allow borrowers to demonstrate their income through their bank statements instead of tax returns

How do you prove your income and employment?

Non-QM lenders verify your income through:

12- or 24-month personal or business bank statements; and
CPA letter verifying the length of your self-employment, nature of business, ownership percentage, and other details about your business.

Demonstrating the flexibility of this program, non-QM lenders use multiple ways to calculate your bank statement income. Some lenders only require the first page of each statement. Oftentimes, the later pages of bank statements contain line items for large deposits or withdrawals. With only the first page being required, you can avoid having to source and explain such large deposits and withdrawals.

Generally speaking, the lender will take the average of your gross deposits, as reflected on your bank statements, and multiply that average by an expense ratio. The expense ratio is typically 50% but may go as high as 55% depending on your line of business and other circumstances.

The maximum DTI allowed under the bank statement program is typically 50% or even 55%, more lenient than the 43% maximum imposed by traditional QM lenders.

What LTVs are available?

Under the bank statement program, you can expect the following LTVs:

Purchases and rate-and-term refinances: Up to 90% LTV
Cash-out refinances: Up to 80% LTV

What are the maximum loan amounts?

The maximum loan amount is higher than the no-ratio program. By submitting your bank statements, your loan amount can be as high as $6M or even higher.

What property and occupancy types are allowed?

This loan program can be used to purchase or refinance several types of properties, including:

Single-family residences;
Townhomes;
Planned-unit development (PUD)
2- to 4-unit properties;
Condominiums (including non-warrantable condos); and
More exotic types (e.g., rural, modular, log homes).

Unlike the no-ratio program, which is limited to owner-occupied, the bank statement program is available for all occupancy types (primary, second, and investment).

What is the minimum credit score needed?

Some bank statement lenders allow credit scores as low as 599. Of course, the higher your credit score, the better your terms will be (higher maximum LTV, lower interest rate).

How is bank statement income calculated?

Click below to view our blog article.

Discover 7 Methods of Calculating Income

Asset Utilization Program

This loan solution is unique because instead of income per se, your creditworthiness is evaluated based on your assets. This is a creative and outside-the-box mortgage loan designed for self-employed borrowers who do not otherwise qualify for other self-employed loan programs.

Who is this program for?

The asset utilization program serves self-employed borrowers and anyone with ample cash reserves and considerable assets like retirees, day traders, serial entrepreneurs, and other borrowers with trust funds. It does not assess your cash flow and liquidity as long as you have significant assets to declare.

How do you prove your income and employment?

This program does not require any form of employment verification. Instead, your income will be computed based on your assets. These assets may include:

Liquid cash accounts: You may declare liquid cash accounts in the form of checking and savings accounts, money market accounts, and certificates of deposit. The lenders compute your monthly income using 100% of these assets’ values.
Stock market investments and securities: You may declare brokerage, mutual funds, government securities, and publicly traded stocks and bonds bought under your or your business’s name. Lenders typically consider 80% to 100% of these assets’ vested value to estimate your monthly income.
Retirement accounts: Retired borrowers may also declare their retirement assets, individual retirement accounts (IRA), or Roth IRA. The accounted value of these assets depends on the borrowers’ age but may range from 70% to 90% of their vested values.
Cryptocurrencies: As creative as they can get, alternative lenders also accept your assets held as cryptocurrencies. This feature is something that traditional banks and loans would not even consider because of its volatility. Under the asset utilization program, up to 90% of the USD value of your cryptocurrencies is used to estimate your income.

Using the declared assets, non-QM lenders estimate the borrower’s monthly income by dividing the value of the post-closing assets by a certain number of months, typically 60 to 84 months. Some lenders only require one month’s statement from each asset to qualify for this program.

Borrowers are also required to have a maximum DTI of 50% or 55% depending on the lender.

What LTVs are available?

Under the asset utilization program, you can expect the following LTVs:

Purchases and rate-and-term refinances: Up to 80% LTV
Cash-out refinances: Up to 80% LTV

What are the maximum loan amounts?

Under the asset utilization program, your loan amount can be as high as $6M or even higher.

What property and occupancy types are allowed?

This loan program can be used to purchase or refinance several types of properties, including:

Single-family residences;
Townhomes;
Planned-unit development (PUD)
2- to 4-unit properties;
Condominiums (including non-warrantable condos); and
More exotic types (e.g., rural, modular, log homes).

The asset utilization program is available for all occupancy types (primary, second, and investment).

What is the minimum credit score needed?

Some asset utilization lenders allow credit scores as low as 599. Of course, the higher your credit score, the better your terms will be (higher maximum LTV, lower interest rate).

P&L Statement Program

This program allows self-employed borrowers to submit a profit and loss statement as proof of income.

Who is this program for?

This program is best suited for self-employed borrowers with sufficient income that is not reflected in their tax returns. Understanding this tricky situation, lenders accept alternative documentation in the form of a P&L statement.

How do you prove your income and employment?

Under the P&L program, borrowers do not need to submit tax returns, tax transcripts, W2s, 1099s, or any other typical income verification documents. Instead, you just provide a copy of the following:

12-month or 24-month P&L statement prepared by a licensed CPA, licensed tax preparer or enrolled tax agent; and
A CPA letter verifying at least one year of self-employment or at least two years of being in the same line of work, your position, ownership percentage, and business inception date.

To qualify for this program, your DTI should be at most 50% or 55%.

What LTVs are available?

Under the P&L program, you can expect the following LTVs:

Purchases and rate-and-term refinances: Up to 80% LTV (or up to 85% if your P&L covers 24 months instead of 12 months)
Cash-out refinances: Up to 80% LTV

What are the maximum loan amounts?

Under the P&L program, your loan amount can be as high as $6M or even higher.

What property and occupancy types are allowed?

This loan program can be used to purchase or refinance several types of properties, including:

Single-family residences;
Townhomes;
Planned-unit development (PUD)
2- to 4-unit properties;
Condominiums (including non-warrantable condos); and
More exotic types (e.g., rural, modular, log homes).

The P&L statement program is available for all occupancy types (primary, second, and investment).

What is the minimum credit score needed?

Some P&L statement lenders allow credit scores as low as 599. Of course, the higher your credit score, the better your terms will be (higher maximum LTV, lower interest rate).

Debt Service Coverage Ratio Program (DSCR)

The DSCR program is the no-ratio program’s counterpart, in that it is designed for investment properties instead of owner-occupied properties. In essence, the lender assesses your ability to repay by looking at the property’s income potential (cash flow) instead of your personal income.

Who is this program for?

This loan program is for the self-employed business owner who wants to invest in real estate but cannot adequately prove their income through tax returns or have high DTIs.

How do you prove your income and employment?

Same as the no-ratio program, your income will not be checked, and your employment will not be verified.

Instead, you qualify based on the cash flow of the property as measured by its “debt service coverage ratio” (DSCR).

To roughly calculate the DSCR of the property, take your gross rental income, and divide that by the total PITIA expenses (principal + interest + taxes + insurance + association fees). The exact gross income or net income calculation can slightly vary from lender to lender. Simply put, your income from the property should be at least equal to the property’s expenses to be eligible.

In other words, a DSCR of at least 1.00x is deemed creditworthy by lenders.

However, some non-QM lenders accept DSCRs less than 1.00x (as low as .75x or even lower). This can be particularly helpful for high-end luxury properties, where the carrying costs are relatively high.

What LTVs are available?

Under the DSCR Program, your maximum LTV is also determined by the type of financing you are applying for. As a guide, here are the maximum LTVs that you can hope to get from your application:

Purchase and rate-and-term refinance: 75% to 80%
Cash-out refinance: 70% to 75%

What are the maximum loan amounts?

If you qualify for a DSCR loan, you can purchase or refinance a wide range of residential investment properties, including high-end ones with a $6M maximum loan amount or more.

What property and occupancy types are allowed?

The eligible properties under the DSCR program are:

Single-family residences;
Townhomes;
Planned-unit development (PUD)
2- to 4-unit properties;
Condominiums (including non-warrantable condos);
Short-term rental properties; and
More exotic types (e.g., rural, modular, log homes).

Note that the DSCR program is only for non-owner-occupied investment properties, not primary residences or second/vacation homes.

What is the minimum credit score needed?

A minimum credit score in the 600s (e.g., 620 or 660) is followed by most lenders offering DSCR. You just have to search for a non-QM lender who can meet your personal credit situation.

Questions about DSCR?

Click below to visit our explainer page.

DSCR Loans Explained

Loans for Self-Employed Foreign Nationals

Last on our list is the loan program designed for self-employed foreign nationals looking to invest in U.S. real estate.

Who is this program for?

This loan is for self-employed foreign nationals who opt not to go through the stringent credit and documentary requirements practiced by most banks and other traditional lenders.

How do you prove your income and employment?

As a foreign national, you have 2 options to qualify. First, you may take the DSCR path and use the property’s cash flow rather than your personal income. See the DSCR guidelines mentioned above.

The second option is to qualify using your own personal income. You would need to ask an accountant for a letter stating your self-employment income for the past two years and year-to-date (YTD). Note that letters written in a foreign language must be translated to English by a certified translator.

What LTVs are available?

Understandably, being self-employed and a foreign national at the same time comes with higher risks and requires lenders to be more conservative. As a result, their maximum LTVs are relatively lower than the other programs on our list. Specifically, the maximum LTVs are:

Purchase and rate-and-term refinance: 70% to 75%
Cash-out refinance: 60% to 65%

What are the maximum loan amounts?

The maximum loan amount is at par with other mortgage loans, set at a maximum of $6M or more.

What property and occupancy types are allowed?

The eligible properties under the foreign national program are:

Single-family residences;
Townhomes;
Planned-unit development (PUD)
2- to 4-unit properties;
Condominiums (including non-warrantable condos);
Short-term rental properties; and
More exotic types (e.g., rural, modular, log homes).

Note that the foreign national program is only for investment properties and second/vacation homes, not primary residences.

What is the minimum credit score needed?

Typically, foreign nationals do not have a U.S. credit score, a huge roadblock in them getting a traditional mortgage loan. Considering this issue, non-QM lenders designed this niche loan without any credit score requirements at all for foreign nationals.

Questions about foreign national loans?

Click below for more information on our foreign national programs.

Learn More

Top 5 tips on finding the best home loan for self-employed

Finding the best home loan for self-employed individuals, whether to purchase a new property or to refinance a current one, can be daunting. Here are 5 tips to ease the process:

Seek Out Lenders Experienced with Self-Employed Borrowers: Not all lenders have experience working with self-employed individuals. Look for lenders who specialize in self-employed mortgage loans. They will better understand your unique financial situation and offer more tailored solutions.
Consider Alternative Loans: Traditional mortgages may require extensive income verification, which can be challenging for self-employed individuals with fluctuating incomes. Explore options like the programs described above, where lenders consider your bank statements or self-declared income to determine eligibility. These loans are more flexible for self-employed borrowers, as they do not require any tax returns to verify income.
Understand the Importance of Reserves: Lenders typically require self-employed borrowers to have reserves, i.e., sufficient funds to cover the mortgage payments. Having a sufficient reserve can make lenders more comfortable with your ability to handle a mortgage. Make sure to discuss reserve requirements with potential lenders.
Reduce Debt-to-Income Ratio: Lenders assess your DTI to determine your ability to handle mortgage payments. To improve your chances of loan approval, work on reducing your DTI by paying down outstanding debts and avoiding new debt obligations in the months leading up to your mortgage application. Fortunately, many non-QM lenders allow DTIs as high as 50% or 55%.
Improve Your Credit Score: Your credit score plays a significant role in securing favorable mortgage terms and a better interest rate. Take steps to improve your credit score by paying bills on time, reducing outstanding debts, and disputing any inaccuracies on your credit report.

For more information on this niche area, visit our mortgage without tax returns page.

How do I find self-employed mortgage lenders?

Finding self-employed mortgage lenders can be a challenging task, but one effective approach is to utilize the services of a skilled mortgage broker. Working with a mortgage broker offers several benefits.

First, the vast majority of non-QM lenders only work through a wholesale channel (as opposed to a direct retail channel), meaning you can only access their programs via a mortgage broker.

Second, mortgage brokers have an extensive network of lenders at their disposal. By working with a mortgage broker, you gain access to a broader range of lending options than you might find on your own.

Third, mortgage brokers streamline the application process. They can assess your unique financial situation, help you gather the necessary documentation, and present your application in the best possible light to potential lenders.

Fourth, mortgage brokers act as intermediaries, negotiating on your behalf with lenders to secure competitive rates and terms. They can help you compare offers from multiple lenders, ensuring that you make an informed decision.

To find the best self-employed mortgage in Florida or beyond, contact us today for a consultation.

Creative non-QM self-employed mortgage loans for every borrower

No W-2? Lack of steady income or recent tax returns? No problem. Self-employment should not prevent you from getting a mortgage loan. With more than 16 million self-employed individuals in the U.S., non-QM lenders understand that self-employed income is tricky. These lenders cater to this market with super creative loan options. With the flexibility of self-employment mortgage loans, you can find a great option to purchase or refinance your dream home even without providing a single tax return.

Self-employed lending is complex

We can navigate you through the process.

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FAQs on mortgage loans for self-employed

Can I get a mortgage with less than 2 years of self-employment?

Yes, it’s possible to qualify for a loan with only 1 year of self-employment or even no income or employment verification at all (e.g., no-ratio or DSCR program). Non-QM lenders offer programs just for self-employed borrowers, understanding that not everyone can show an employment track record of 2 years.

Are self-employed mortgages more expensive?

Self-employed mortgages may have slightly higher interest rates compared to traditional mortgages. However, the exact cost difference varies based on factors like credit history and down payment. Working with a mortgage broker can help you find competitive rates and minimize any potential cost disparity.

What income do lenders look at for self-employed?

Rather than look at tax returns, non-QM lenders look at alternative income documentation, such as 12-24 months of bank statements, a profit-and-loss statement, or a CPA letter. Moreover, some lenders do not require any self-employment income proof at all, under the no-ratio or DSCR program.