Self-Employed Mortgage Requirements: How to Qualify When You're Buying a New-Construction Home
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Yes, you can get a mortgage when you are self-employed. Most lenders follow Fannie Mae or FHA rules, and both generally want a two-year history of self-employment, backed by your signed federal tax returns. On a new-construction home there is one more catch: your papers can go stale while the house is being built, so the lender checks again before closing.
This guide covers who counts as self-employed, what each loan type asks for, how write-offs shrink your qualifying income, and how to keep a long build from tripping up your approval. Every rule below comes from the Fannie Mae Selling Guide and HUD's FHA policy, checked on October 22, 2026.
Who counts as self-employed for a mortgage?
For both Fannie Mae and FHA, you are self-employed if you own 25% or more of a business. Fannie Mae's Selling Guide says ""any individual who has a 25% or greater ownership interest in a business is considered to be self-employed"" (section B3-3.5-01). HUD's FHA rules use the same 25% line (Mortgagee Letter 2022-09).
That includes sole owners who file a Schedule C, partners, and owners of S corporations and corporations. Freelancers and 1099 contractors who run their own work usually fall here too. Ask your lender how it will treat your income before you apply.
How many years of self-employment do you need?
The standard answer is two years, but there are exceptions.
Conventional loans (Fannie Mae). Fannie Mae ""generally requires lenders to obtain a two-year history"" of earnings. It can accept less than two years if your most recent signed personal and business tax returns show a full 12 months of income from your current business, and you can document earlier income at the same or higher level in the same line of work (B3-3.5-01).
FHA loans. HUD lets lenders use self-employment income if you have been self-employed ""for at least two years."" Between one and two years only counts if you worked in the same or a related line of work for at least two years before (Mortgagee Letter 2022-09).
Conventional (Fannie Mae) | FHA | |
|---|---|---|
Who is self-employed | 25% or more ownership | 25% or more ownership |
Standard history | Two years | At least two years |
Shorter history | Under two years if your latest returns show 12 full months and you have prior income in the same field | One to two years only with two years of prior work in the same or a related field |
Tax returns | Signed returns for the past two years, or IRS transcripts | Individual returns for the most recent two years |
Fewer returns | One year of returns if the business has existed five years and you have owned 25% or more for all five | Business returns can be skipped only if set conditions are met |
Profit and loss statement | Not required for most businesses, but the lender may ask if you apply more than 120 days after your business tax year ends | Year-to-date P&L required if more than a calendar quarter has passed since your last tax year ended |
Sources: Fannie Mae Selling Guide B3-3.5-01 and B3-3.7-04; HUD Mortgagee Letter 2022-09.
How do lenders figure self-employed income?
Lenders start from what your tax return says you earned, not what your business brought in. Fannie Mae's guide says the goal is to find ""the amount of income that can be relied on by the borrower in qualifying for their personal mortgage obligation"" (B3-3.5-01).
That means your write-offs cut both ways. Every expense you deduct lowers your taxes, and it also lowers the income a lender can count. Here is a clearly labelled EXAMPLE for a Schedule C business:
Example line | Amount |
|---|---|
Gross receipts | $150,000 |
Business expenses deducted | $95,000 |
Net profit on Schedule C | $55,000 |
Monthly income the lender starts from ($55,000 ÷ 12) | $4,583 |
Some items can be added back. Fannie Mae lets lenders add allowable adjustments ""such as nonrecurring income and expenses, depreciation, and depletion"" when they review your business returns (B3-3.7-04). Your lender does the exact math. That monthly figure then goes into your debt-to-income ratio, which our DTI guide explains.
What documents do self-employed buyers need?
Plan to have these ready:
Signed personal federal tax returns for the past two years, with all schedules, or IRS transcripts (Fannie Mae B3-3.5-01).
Business returns if you own a partnership, S corporation or corporation, unless your lender says they can be skipped.
A year-to-date profit and loss statement, if your lender or loan type asks for it.
A signed IRS Form 4506-C, which lets the lender pull your transcripts. Fannie Mae says it ""is valid for 120 days"" after you sign it (B3-3.1-02).
Something that shows your business is still open, since Fannie Mae requires the lender to confirm the business exists (B3-3.1-04).
Getting these in order early is the best way to get a solid pre-approval.
What this means for new-construction buyers
A new build can take months from contract to closing, and our guide to how long it takes to build a house shows the Census averages. Three Fannie Mae rules matter a lot over that stretch:
Four-month document limit. Fannie Mae says credit documents, including ""employment, income, and asset documentation,"" must be ""no more than four months old on the note date,"" and that applies to ""existing and new construction"" alike (B1-1-03). Expect to send fresh bank statements and papers near closing.
The 120-day business check. For self-employed borrowers, the lender must re-verify your business ""no more than 120 calendar days on or before the note date,"" and confirm you still do the same work (B3-3.1-04).
Tax season in the middle of your build. Fannie Mae defines the ""most recent"" tax return as ""the last return scheduled to have been filed with the IRS"" (B1-1-03). If your closing slides past April 15, the return that counts as most recent can change, and your lender may ask for the new one, or for proof of an extension, before you close.
Two habits help. Keep your business steady during the build: do not close it, switch fields, or take a big drop in income without talking to your lender first. And file your tax return on time if your closing is near April. Our underwriting guide shows what else gets checked twice on a new build.
Is it harder to get a mortgage if you are self-employed?
The rules ask for more paperwork, not a different standard. Wage earners prove income with pay stubs and a W-2. You prove it with tax returns, so your lender has to read your business, not just your paycheck. The rules above are the same for every builder and every community, so you can shop new homes knowing what to have ready. If you are comparing loan types, our FHA vs conventional guide lays them side by side.
Common Questions
Can you get a mortgage if you are self-employed?
Yes. Fannie Mae and FHA both allow self-employment income. They generally want a two-year history backed by your signed federal tax returns, and a lender will look at your net income after business expenses.
Can I get a mortgage with less than two years of self-employment?
Sometimes. Fannie Mae can accept less than two years if your latest returns show 12 full months from your current business and you earned the same or more in the same field before. FHA can count one to two years only if you worked two years in the same or a related line of work first.
Who counts as self-employed for a mortgage?
Under both Fannie Mae and FHA rules, anyone who owns 25% or more of a business is treated as self-employed. That includes sole owners, partners and owners of S corporations and corporations.
Do lenders use my gross income or my net income?
They start from the income on your tax returns after business expenses. Fannie Mae lets lenders add back some items, such as nonrecurring expenses, depreciation and depletion. Your lender does the exact math.
Do I need a profit and loss statement?
For a Fannie Mae loan, it is not required for most businesses, but the lender may ask if you apply more than 120 days after your business tax year ends. For FHA, a year-to-date profit and loss statement is required if more than a calendar quarter has passed since your last tax year ended.
Why does my lender check my business again before I close on a new build?
Fannie Mae requires the lender to verify a self-employed borrower's business no more than 120 calendar days before the note date. Credit, income and asset papers also must be no more than four months old on that date, for new and existing homes alike.
Ready to take the next step?
Call 561-704-0091 to talk with a National House Search specialist, or Schedule a visit.
Related reading: Mortgage underwriting on a new-construction home · Debt-to-income ratio for a mortgage · What it means to be pre-approved
Sources: Fannie Mae B3-3.5-01 · Fannie Mae B3-3.7-04 · Fannie Mae B3-3.1-04 · Fannie Mae B3-3.1-02 · Fannie Mae B1-1-03 · HUD Mortgagee Letter 2022-09
This is general information, not financial, tax or legal advice. Figures checked October 22, 2026.