Self-Employed Mortgage Austin
Five documentation paths for self-employed Austin borrowers: conventional with tax returns, bank statement, P&L only, 1099 only, and asset depletion. I run all five to find the one that closes.
A self-employed mortgage in Austin is any residential mortgage where qualifying income comes from a business the borrower owns, a 1099 contracting relationship, or another non-W-2 source. Documentation paths split between conventional (two years of personal and business tax returns, calculated with Fannie Mae or Freddie Mac worksheets) and non-QM programs (bank statement, P&L only, 1099 only, asset depletion). Why it matters in Austin: heavy tax write-downs that benefit a business owner in April reduce the income a conventional underwriter can use in October. The right structure on day one determines whether the file closes at all.
Key facts
- Conventional: two years of personal and business tax returns, qualifying income per Fannie Mae Selling Guide B3-3.2 or Freddie Mac Section 5304
- Bank statement: non-QM; 12 or 24 months of business or personal statements; lender-set expense factor (often 50%) applied to deposits
- P&L only: non-QM; CPA-prepared profit-and-loss statement, occasionally a self-prepared version with the right lender
- 1099 only: non-QM; one or two years of 1099s plus a YTD pay verification
- Asset depletion: liquid investable assets divided by a term (commonly 84 months) used as qualifying income
- Two-year self-employment history generally required for conventional; one-year possible on some non-QM
- Austin metro counties: Travis, Williamson, Hays, Bastrop, Caldwell, Burnet; conventional limit $832,750 (1 unit, statewide); FHA limit varies by county
Documentation paths compared
Programs commonly used by self-employed Austin borrowers. Specific qualification depends on the file; I run the file across paths before recommending one.
| Path | Documentation | Typical history needed | Pricing tier |
|---|---|---|---|
| Conventional | Two years personal + business tax returns | Two years | Conforming (lowest) |
| Bank statement | 12 or 24 months of bank statements | Two years (some 12 mo allowed) | Non-QM (above conventional) |
| P&L only | CPA-prepared P&L (some self-prepared with right lender) | Two years preferred | Non-QM |
| 1099 only | One to two years of 1099 forms | One to two years | Non-QM |
| Asset depletion | Liquid asset statements; divided by 84 months | Asset-driven, not income-history | Non-QM |
Who each path fits
Conventional with tax returns fits
- Self-employed two years or more
- Tax returns show enough qualifying income after the lender worksheet
- No heavy write-downs that crater Schedule C income
- Standard W-2 or K-1 income alongside the self-employed income
Bank-statement fits
- Business is consistently profitable but tax returns understate cash flow
- Owner pays themselves through draws rather than a W-2
- Last two filing years show heavy write-downs (depreciation, equipment, home office, vehicle)
- 12 or 24 months of clean business or personal statements with steady deposits
P&L only fits
- CPA-prepared books are current and clean
- Borrower wants the simplest documentation path
- Comfort with non-QM pricing
Asset depletion fits
- Borrower has significant liquid or near-liquid investable assets
- Self-employed income is irregular, project-based, or hard to document
- Borrower wants a path that does not require new tax returns
How I handle self-employed Austin files
I run every self-employed Austin file through both conventional and at least one non-QM path on day one. The cheapest-rate program is not always the one that closes; the one that closes is the one where the documentation actually exists and is clean. I would rather have you on a slightly higher-rate bank-statement file that funds than on a conventional file that gets killed in underwriting because the depreciation schedule turned your $200,000 Schedule C net into $40,000 of qualifying income.
Most self-employed Austin borrowers underestimate two things. First, how heavily depreciation, depletion, and home-office deductions on Schedule C will reduce conventional qualifying income (some of those add back; the lender worksheet decides). Second, how clean the bank statements need to be: regular salary-equivalent deposits, no large unexplained transfers, no inter-account shuffling that confuses the deposit calculation. I review the last 24 months of statements before we apply, so we catch issues on day one rather than at underwriting.
I am Austin-based and licensed statewide in Texas. I work all the Austin-metro counties self-employed borrowers actually buy in: Travis, Williamson, Hays, Bastrop, Caldwell, Burnet. Send me a recent tax return summary and a sample month of bank statements; I will tell you which path your file lines up with before we formally apply.
Sources & methodology
All figures verified against primary sources as of May 26, 2026.
- Fannie Mae Selling Guide B3-3.2: Self-Employment Income
- Freddie Mac Single-Family Seller/Servicer Guide Section 5304: Self-Employed
- FHFA: 2026 Conforming Loan Limit Values announcement (Nov 25, 2025)
- HUD Mortgagee Letter 2025-23: 2026 FHA Forward Limits
- Kellibrooke: Bank Statement Program page (companion)
Common self-employed mortgage questions
Can a self-employed Austin borrower get a conventional mortgage?
Yes. Conventional underwriting (Fannie Mae and Freddie Mac) accepts self-employed borrowers with two years of personal and business tax returns. The income is calculated using the lender's worksheet, which adds back depreciation, depletion, and certain non-cash items. If you write down income heavily on Schedule C or via S-corp distributions, conventional may underwrite to a lower qualifying income than your gross.
What is a bank statement mortgage?
A bank statement mortgage is a non-QM program where qualifying income is derived from deposits into the borrower's business or personal bank account over a 12 or 24-month window, applying a lender-set expense factor. It is designed for self-employed borrowers whose tax returns understate cash flow due to legitimate write-downs.
How is 1099 income treated for an Austin mortgage?
1099 contractor income generally needs a two-year average for conventional, or can qualify on a one-year 1099 file with some lenders if the contracting relationship is stable. Bank-statement and P&L-only programs are alternatives when tax returns understate take-home pay.
What is a P&L only mortgage?
A P&L-only mortgage uses a CPA-prepared (or self-prepared, lender-dependent) profit and loss statement instead of tax returns or bank statements to qualify the borrower. It is a non-QM program and pricing reflects the looser documentation.
What is asset depletion underwriting?
Asset depletion (sometimes called asset utilization) lets a borrower qualify based on liquid assets divided by a term (often 84 months). It works for borrowers with significant savings or investment accounts who do not draw a W-2 paycheck or whose self-employed income is irregular.
Do I need to be in business for two years to qualify in Austin?
Most conventional programs require a two-year history of self-employment, with exceptions for borrowers transitioning from a closely related W-2 role. Non-QM programs can sometimes underwrite a one-year self-employment history with stronger compensating factors.
Will my Austin mortgage close faster on bank statements or tax returns?
Tax-return files tend to clear faster because conventional underwriting has fewer subjective inputs. Bank-statement files require deposit-by-deposit categorization, which adds time. I structure the file on day one so the path that closes fastest is the path we run.
Self-employed in Austin?
Send me your last tax return summary and a sample month of bank statements. I will tell you which documentation path your file fits before we formally apply.