Self-Employed Mortgages in Texas

Key Takeaways

Self-employed Texans can qualify for mortgages using bank statements instead of tax returns, allowing business owners to leverage actual cash flow rather than taxed income.

Specialized programs like bank statement loans, asset-based mortgages, and DSCR loans offer flexible qualification options without requiring traditional W-2 income documentation.

Most self-employed mortgage programs in Texas require credit scores of 640+ and down payments of 10-20%, though some options exist for scores as low as 600.

Texas lenders typically want to see at least two years of self-employment history, though some programs accept one year with previous experience in the same field.

The self-employed mortgage process takes approximately 45-60 days from application to closing, compared to 30 days for traditional borrowers.

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Running your business in Texas gives you freedom but makes buying a home harder. Traditional lenders often don't understand self-employed income, leaving many business owners frustrated but we have got you covered, with our years of expertise on self-employed loan programs, this guide will help self-employed Texans like you fasten your loan approval process. 

What is a self-employed mortgage?

A self-employed mortgage is a home loan specifically designed for individuals who work for themselves rather than for an employer. These mortgage products cater to business owners, freelancers, independent contractors, gig workers, and other self-employed professionals who may have unique income documentation challenges.

The key features of self-employed mortgages include:

1. Alternative income verification methods: Rather than relying solely on W-2 forms and traditional employment verification, these loans may use tax returns, bank statements, profit and loss statements, or business revenue records to assess income.

2. Specialized underwriting: Lenders evaluate business stability, industry outlook, and income consistency using different criteria than they would for traditionally employed borrowers.

3. Flexible documentation options: Some self-employed mortgage programs include bank statement loans (using 12-24 months of deposits to verify income), asset depletion loans (qualifying based on assets rather than income), or no-income verification loans for borrowers with substantial down payments.

4. Accommodation for fluctuating income: These mortgages typically consider average income over 1-2 years to account for the seasonal or project-based income variations common among self-employed people.

While self-employed mortgages often have slightly higher interest rates and may require larger down payments than conventional loans, they provide a crucial pathway to homeownership for the growing number of Americans who are self-employed and might otherwise struggle to qualify for traditional mortgage financing.

Understanding Self-Employed Mortgage Challenges

As someone who works for yourself in Texas, you likely face these home loan hurdles:

• Unpredictable income: Your earnings fluctuate, making it hard to prove stability.
• Tax write-offs working against you: Business deductions lower the income lenders see.
• No regular pay stubs: Without consistent paychecks, proving income becomes difficult.
• Business structure complications: Each business type creates unique paperwork challenges.
• Tougher lending rules: Since 2008, banks have made qualifying harder for self-employed people.

How Truss Financial Group Serves Texas Entrepreneurs?

At Truss Financial Group, we focus on helping self-employed Texans get home loans by:

• Looking at your actual cash flow instead of just tax returns
• Offering flexible income verification options
• Understanding Texas business environments across industries
• Providing personal guidance through each step
• Working with lenders who value entrepreneurial success

Benefits of Self-Employed Mortgage Programs

Our programs designed for self-employment give you:

• Bank statement loans: Qualify using your deposits instead of tax returns
• Asset-based options: Use your investments to secure financing
• Better approval chances: Work with lenders who understand self-employed income
• Competitive rates: Access similar rates to traditional borrowers

Texas business owners deserve home loans that recognize their success. Our programs provide the flexibility you need without unnecessary costs or complications.

Self-Employed Mortgage Options in Texas

Self-employed individuals in Texas have several mortgage options that work with non-traditional income. Here are your main choices:

1. Bank Statement Loans for Texas Business Owners

Bank statement loans let you qualify using your bank deposits instead of tax returns:

• Use 12-24 months of personal or business bank statements
• Lenders look at your average monthly deposits
• Business expenses don't count against you
• Available for primary homes, second homes, and investments
• Typically need 620+ credit score and 10%+ down payment

These work well for business owners who show less income on tax returns than they earn.

2. Asset-Based Mortgage 

If you have significant savings or investments but complex income:

• Qualify based on your assets rather than monthly income
• Use investment accounts, retirement funds, and other liquid assets
• Need fewer income documents
• Assets typically need to be 1.5-2.5 times the loan amount
• Good for business owners with wealth but irregular income

3. Tax Return-Based Qualification Options

Some self-employed individuals can still use traditional options:

• Conventional loans through Fannie Mae/Freddie Mac
• FHA loans for lower down payments
• VA loans for veterans and service members
• Usually need two years of tax returns
• Works best if you show strong, consistent income on tax returns

4. DSCR Loans for Texas Investment Properties

For investment properties, Debt Service Coverage Ratio loans focus on the property's income:

• Qualify based on the rental income covering the mortgage payment
• No need to show personal income
• Need a ratio of 1.0 or higher (property income must cover the loan payment)
• Perfect for building a rental portfolio without income limitations
• Available for both residential and small commercial properties

Each option has different requirements that can work with your unique situation as a self-employed individual.

What are the Qualifying Requirements for a Self-Employed Mortgage in Texas?

Getting a mortgage when self-employed requires different documentation than traditional employment. Here's what you need to know:

Income Verification Alternatives for Texas Entrepreneurs

Self-employed Texans can verify income through:

• Bank statements: 12-24 months of deposits show your actual cash flow
• Profit and loss statements: Recent business performance documentation
• Asset statements: Using your savings and investments to qualify
• 1099 forms: Showing consistent freelance income

Credit Requirements for Self-Employed Texans

Credit standards are often higher for self-employed borrowers:

• Most programs require 640+ credit scores
• Conventional loans: 680+ for best rates, 620+ minimum
• On-time payment history is crucial
• Keep credit card balances under 30% of limits
• Avoid new credit applications during the mortgage process

Down Payment Options for Self-Employed Home Buyers

Plan for these down payment requirements:

• 10-20% for most self-employed mortgage programs
• 20% down avoids private mortgage insurance
• Lower down payments may be available with strong credit
• Acceptable sources include savings, business proceeds, and gift funds
• Some Texas programs offer down payment assistance for eligible buyers

Debt-to-Income Considerations for Business Owners

Managing your debt-to-income ratio:

• Most lenders cap at 43-50% for self-employed borrowers
• Business debts on personal credit count against you
• Business loans paid by your company may be excluded with documentation
• Paying down personal debts before applying improves your chances
• Some loan programs focus more on cash flow than standard DTI calculations

Preparing ahead with proper documentation and understanding these requirements will increase your approval odds as a self-employed home buyer.

Texas Industries We Serve

We provide specialized mortgage solutions for self-employed individuals across Texas' diverse business landscape.

1. Real Estate Professionals in Texas

Challenges:

• Commission-based income fluctuates seasonally
• Business expenses reduce taxable income
• Multiple income streams from sales and property management

Solutions:

• Bank statement programs that capture commission deposits
• Options considering year-to-date earnings for growing agents
• Specialized underwriting for REALTORS®, brokers, and investors

2. Texas Medical and Dental Practices

Practice-Specific Considerations:

• High-income potential but significant student loan debt
• Complex practice ownership structures
• New practices with strong growth potential

Tailored Programs:

• Physician-specific loans with reduced down payments
• Options that exclude student loans from debt calculations
• Recognition of future income potential for specialists

3. Technology Consultants and Freelancers

Tech Industry Challenges:

• Project-based income with gaps between contracts
• Remote work for out-of-state clients
• Income through digital payment platforms

Flexible Solutions:

• Programs that work with irregular deposit patterns
• Documentation options for digital payments
• Mortgage options that understand contract work

4. Texas Small Business Owners

Small Business Owner Challenges:

• Tax strategies that minimize reported income
• Reinvestment of profits limiting personal income
• Various business structures affecting documentation

Our Approach:

• Bank statement programs that capture true cash flow
• Options considering business assets and liquidity
• Solutions for different business structures

We understand your industry-specific challenges and offer tailored mortgage solutions that recognize your financial strengths beyond standard tax returns.

Property Types Eligible for Self-Employed Mortgages

What is the Application Process for Self-Employed Mortgage in Texas?

Getting a mortgage when self-employed requires more preparation than traditional employment. Here's what to expect:

Documentation Needed for Texas Self-Employed Mortgages

Basic Documentation:

Business license or DBA filing

Two years of business tax returns

Year-to-date profit and loss statement

Business bank statements (12-24 months)

Personal tax returns with all schedules

Proof of self-employment (letter from CPA, business license)

For Bank Statement Loans:

12-24 months of bank statements

Business expense breakdown

For Asset-Based Loans:

Investment account statements

Retirement account statements

Strengthening Your Texas Mortgage Application

Before Applying:

• Separate personal and business finances
• Maintain consistent business deposits
• Reduce credit card balances
• Avoid large business purchases
• Organize clear financial statements
• Document recurring business expenses

Credit Tips:

• Review your credit report for errors
• Pay down debt
• Avoid new credit applications
• Keep business credit cards below limits

Timeline for Self-Employed Mortgage Approval

Pre-Application: 1-3 months

• Gather documentation
• Review credit reports
• Meet with potential lenders

Pre-Approval: 1-2 weeks

• Submit initial documentation
• Complete application
• Receive conditional approval

Full Underwriting: 2-4 weeks

• Property Appraisal
• Submit additional documents
• Address underwriter questions

Closing: 1-2 weeks

• Review closing disclosure
• Schedule closing
• Sign documents

For self-employed borrowers, the entire process typically takes 45-60 days. Working with a lender experienced in self-employed mortgages can streamline this timeline.

Texas Cities We Serve with Self-Employed Mortgages

We help self-employed individuals secure mortgages throughout Texas:

Houston Metro Area: Houston, The Woodlands, Sugar Land, Katy, Pearland

Dallas-Fort Worth Metroplex: Dallas, Fort Worth, Plano, Frisco, Arlington

Austin Region: Austin, Round Rock, Cedar Park, Georgetown, San Marcos

San Antonio Area: San Antonio, New Braunfels, Boerne, Schertz

Coastal Regions: Corpus Christi, Galveston, Port Aransas, Beaumont

North and West Texas: Lubbock, Amarillo, Midland-Odessa, Waco, Abilene

Our mortgage specialists understand local market conditions and provide solutions tailored to your location and industry.

Frequently Asked Questions: Texas Self-Employed Mortgages

How many years of self-employment history do I need in Texas?

Most programs require two years of self-employment history, with some exceptions:

• One year may work if you previously worked in the same industry
• Some bank statement loans allow just one year with good credit or a larger down payment
• New business owners might qualify with substantial assets or a co-borrower
• Certain professions like doctors may have reduced time requirements

Can I get a mortgage with a fluctuating income in Texas?

Yes, several options accommodate income fluctuations:

• Bank statement programs look at average deposits over 12-24 months
• The asset-based qualification focuses on your wealth rather than your monthly income
• Portfolio loans consider your overall financial picture
• Seasonal business underwriting can emphasize peak season earnings

Are interest rates higher for self-employed mortgages in Texas?

Not necessarily:

• Strong credit (680+) can secure rates within 0.25-0.5% of traditional loans
• Larger down payments (20%+) help reduce rate adjustments
• Bank statement loans often have minimal rate differences for qualified borrowers
• Tax return-based qualification offers standard rates when you meet requirements

What documentation alternatives are available for Texas entrepreneurs?

Several options exist when tax returns don't reflect your true income:

• Bank statements (12-24 months of deposits)
• Asset depletion calculations
• P&L statements prepared by an accountant
• DSCR loans for investment properties
• 1099 verification for independent contractors
• CPA letters verifying business stability

What's the difference between bank statement loans and stated income loans in Texas?

Bank statement loans use verified bank deposits to calculate income, while traditional stated income loans (popular pre-2008) allowed borrowers to simply state their income without verification. Today's bank statement loans provide flexibility while still verifying actual cash flow through documented deposits, making them compliant with ability-to-repay regulations and more secure than the "no-doc" loans of the past.

How do self-employed mortgages affect property types I can purchase in Texas?

Self-employed mortgage programs in Texas work with most property types, including single-family homes, condos, townhouses, and multi-unit properties. However, certain property types may have higher down payment requirements or rate adjustments. Non-warrantable condos, mixed-use properties, and manufactured homes often require specialized programs that Truss Financial Group can help you navigate. Investment properties typically require 20-25% down with self-employed documentation.

Can I refinance my existing Texas mortgage with a self-employed loan program?

Yes, self-employed mortgage programs are excellent refinancing tools for Texas business owners who've become self-employed since their original mortgage or whose business structure has changed. These programs allow you to potentially lower your rate, change your term, or access equity without meeting traditional income verification requirements. The refinance process typically requires the same documentation as a purchase but may move more quickly since there's no purchase contract or seller timeline.

Conclusion: Secure Your Texas Dream Home with Self-Employed Mortgage Solutions

Navigating the mortgage landscape as a self-employed Texan doesn't have to be overwhelming. At Truss Financial Group, we've helped thousands of entrepreneurs, freelancers, and business owners secure home financing that recognizes their true financial strength—not just what appears on tax returns.

Our specialized self-employed mortgage programs offer the flexibility Texas business owners need, with options that evaluate your actual cash flow through bank statements, leverage your assets, or focus on investment property performance. With competitive rates, down payments starting at 10%, and loan amounts designed for Texas' diverse real estate markets, we make homeownership accessible for self-employed professionals.

Ready to turn your entrepreneurial success into homeownership? Contact Truss Financial Group today at 888-878-7715 or visit www.trussfinancialgroup.com to schedule your personalized consultation and discover the self-employed mortgage solution that's right for your situation.