Buying when you own the business.
Your tax return
is your paycheck.
If you own 25 percent or more of a business, most lenders treat you as self-employed. They qualify you on the income your tax returns show, usually over the last two years, not on what the business brings in. That means the planning starts with your returns, often a year or more before you buy. This page covers how the most common loan standard reads self-employment income, what to gather, and what to sort out with your CPA and a loan officer before you write an offer.
The rules behind the letter.
Most conventional loans follow the Fannie Mae Selling Guide. Other loan programs have their own rules, so your loan officer is the one who confirms which apply to you.
- 25 percent ownership makes you self-employed.Under the Fannie Mae Selling Guide, anyone with a 25 percent or greater ownership interest in a business is considered self-employed, whatever the business pays them.
- Two years is the usual history.Lenders generally want two years of self-employment income. Less can work when your most recent returns show a full 12 months from the current business and you earned the same or more in the same or a similar line of work before.
- They count what the returns show.The lender works from your signed federal returns, including all schedules, or IRS transcripts of them, and completes a cash flow analysis. Deductions that lower your taxes also lower the income you qualify on.
- The trend matters.Underwriters compare year over year: gross income, expenses and taxable income. Steady or rising income reads better than a drop, and they look at whether the business can keep paying you.
- Business returns are sometimes required.Depending on how the business is set up and how long you have owned it, the lender may ask for business returns as well as your personal ones.
Build the file before you tour.
Have these ready before you ask for a pre-approval, so the letter in your offer is backed by an underwriter's review rather than a conversation. Your lender will tell you exactly which apply.
- Two years of personal federal returns,signed, with every schedule.
- Business returns,if the lender asks for them, for the same years.
- A year-to-date profit and loss statement,which many lenders ask for when you apply partway through a year.
- Recent bank statements,personal and business, for the accounts your down payment and reserves come from.
- Proof the business exists,such as your Arizona Corporation Commission filing, a city or state license, or a letter from your CPA.
Plan the year you buy.
Talk to your CPA first
The same deductions that save you tax shrink the income a lender can count. If you plan to buy in the next year or two, ask your CPA how your filing choices will read to a lender.
File on time
A missing or unfiled return holds up the loan. If the year has closed and you have not filed, expect the lender to wait for it.
Keep the accounts clean
Large unexplained deposits and moving money between business and personal accounts all need paperwork. Keep the down payment in place and ask before you move it.
Hold off on new debt
A new vehicle, equipment loan or credit line changes your debt-to-income ratio. Ask your loan officer before you sign for anything between pre-approval and closing.
When the returns do not tell the story.
Some lenders offer loans that qualify self-employed buyers on bank statements or other measures instead of tax returns. They come with their own terms, and they are worth comparing side by side with a conventional loan. A licensed loan officer can lay out the trade-offs for your file. I can introduce you to lenders I trust; I am not paid for any introduction, and you are free to use any lender.
Common questions
Am I self-employed if I am paid a salary by my own company?
Under the Fannie Mae Selling Guide, owning 25 percent or more of the business makes you self-employed for the loan, even if the company pays you a W-2 salary. Your loan officer will confirm how your loan program treats it.
Can I buy with less than two years in business?
Sometimes. The guide allows it when your most recent returns show a full year from the current business and you earned the same or more in the same or a similar field before. Ask a loan officer to review your file early.
Why is my qualifying income lower than what my business makes?
Lenders work from your tax returns, after deductions, and from what the business can pay you while staying healthy. Revenue is not income for this purpose.
Can I use business funds for the down payment?
Often, with paperwork. Expect the lender to document where the money came from and ask whether taking it out affects the business. Ask your loan officer before you move any funds.
Will you help me find a lender?
Yes. I can introduce you to lenders I trust who work with self-employed buyers. I am not paid for any introduction, and you are free to use any lender.
Questions about buying as a business owner?
Text me where you are: how long you have owned the business and when you want to buy. I will tell you what to line up first and introduce you to lenders I trust. I am not paid for any introduction, and you are free to use any lender. Call or text 480-485-4261. If you already have an agent under contract, ask them first.
This page is general information, not legal, tax or lending advice. Loan program rules change and vary by lender. Source: Fannie Mae Selling Guide, Underwriting Factors and Documentation for a Self-Employed Borrower. Checked 28 October 2026.