Yes. Consultants and coaches can qualify for a mortgage with 12 or 24 months of bank statements instead of tax returns. The lender adds up your business deposits, takes out an expense factor for your costs, and uses what is left as your income. Most lenders want about two years in the same line of work.
How the money comes in
Consultants are paid by clients on invoices or retainers. A few large clients can make up most of the income.
What the lender looks for in your statements
Client payments count. Lenders may ask about a large client that makes up most of your deposits, and about gaps between contracts.
Transfers between your own accounts, loan proceeds and other one time money are usually left out. The guide on deposit problems covers how lenders handle large or unusual deposits.
Your costs and the expense factor
Consulting usually has low costs: a laptop, software and travel. The 50% default often cuts your income far below reality, so a CPA letter is usually worth getting.
Most lenders start with a 50% expense factor. A letter from your CPA or enrolled agent, or a profit and loss statement prepared by a tax professional, can show lower costs. See how expense factors work.
Proof that the business is real
Your company filing, client contracts and a website or professional listing that shows the business is active. Lenders also accept a CPA or tax preparer letter confirming how long you have been in business.
Common snags, and how to avoid them
- One client making up most of your income.
- Gaps between contracts.
- A recent switch from employee to consultant for the same company.
What to gather
- 12 or 24 months of business or personal bank statements, every page.
- Proof of your business or license.
- A CPA or enrolled agent letter if your costs are below half of revenue.
- Recent statements for savings or retirement accounts you will use for the down payment or reserves.
Other loans to compare
If you are paid on 1099s, compare a 1099 loan. Bank statement loans usually cost more than a conventional loan and ask for a larger down payment, so I check whether a standard loan can count your income first.
More jobs: bank statement loans by job · Back to no tax return loans · bank statement loan requirements
Common questions
Can consultants and coaches get a mortgage without tax returns?
Yes. A bank statement loan uses 12 or 24 months of deposits instead of tax returns. Most lenders want about two years in the same line of work.
What expense factor will the lender use?
Most lenders start at 50% of deposits. A CPA or enrolled agent letter, or a third party profit and loss statement, can support a lower number if your real costs are lower.
Do bank statement loans cost more?
Usually, yes. Expect a higher rate and a larger down payment than a conventional loan. The exact cost depends on your credit, down payment and documents.