How to Get a Mortgage as a Freelancer: The Complete 2026 Guide

Freelancing offers freedom and flexibility — but when it's time to buy a home, that flexibility can feel like a liability. Lenders love predictable W-2 income, and freelance earnings are anything but predictable.

The good news? Freelancers get approved for mortgages every day. The key is understanding what lenders look for, choosing the right loan program, and preparing your [documentation](/blog/heloc-documentation-requirements) strategically.

Why Freelancers Face Extra Scrutiny

Mortgage underwriters assess risk. A W-2 employee with five years at the same company represents predictable, verifiable income. A freelancer with income that varies month to month represents uncertainty — at least on paper.

The specific challenges freelancers face:

Income variability — your best month might be five times your worst month
Tax deductions reduce qualifying income — the write-offs that save you on taxes hurt you on mortgage applications
Shorter income history — some freelancers have less than two years of self-employment
Multiple income streams — harder to verify than a single employer
No employer verification — lenders can't just call your boss

What Lenders Look At

The Two-Year Rule

Most mortgage programs require two years of self-employment history in the same field. Lenders want to see:

Two years of personal tax returns (all schedules)
Two years of business tax returns (if you have a business entity)
Year-to-date profit and loss statement
Business license or proof of business existence

How Lenders Calculate Your Income

This is where it gets tricky. Lenders don't use your gross revenue — they use your net qualifying income after deductions:

Start with your net profit from Schedule C (sole proprietor) or K-1 (partnership/S-corp)
Add back certain non-cash deductions like depreciation and depletion
Average the two years
If income is declining year over year, lenders may use the lower year or deny the application

Example: You earned $120,000 gross in Year 1 and $140,000 in Year 2. After deductions, your Schedule C shows $65,000 net (Year 1) and $70,000 net (Year 2). Your qualifying income is approximately $67,500 — the two-year average of your net income.

The Write-Off Dilemma

Every dollar you deduct reduces your qualifying income. A freelancer earning $150,000 who deducts $80,000 in expenses qualifies based on $70,000 — not $150,000.

Strategic decision: In the one to two years before applying for a mortgage, consider reducing discretionary deductions. Taking a larger tax bill in exchange for higher qualifying income can save you far more in mortgage terms. Consult your CPA about the trade-offs.

Loan Options for Freelancers

1. Conventional Loans (Fannie Mae/Freddie Mac)

The standard option, requiring:

Two years of self-employment
Full tax returns for income verification
Credit score of 620+ (680+ for best terms)
[DTI ratio](/blog/debt-to-income-ratio-guide) below 45% to 50%
3% to 20%+ down payment

Best for: Freelancers with two+ years of stable or increasing income documented on tax returns.

2. FHA Loans

More flexible than conventional:

Two years of self-employment (one year may be acceptable with strong compensating factors)
Credit score as low as 580 with 3.5% down
Higher DTI allowances (up to 57% in some cases)
Full tax return documentation required

Best for: Freelancers with lower credit scores or higher debt ratios.

3. Bank Statement Loans

A game-changer for freelancers who deduct heavily on taxes:

Use 12 to 24 months of bank statements instead of tax returns
Lenders calculate income from deposits rather than tax return net income
Typically requires 10% to 20% down
Credit score requirements usually 660+
Higher interest rates (0.5% to 1.5% above conventional)

Best for: Freelancers whose tax returns don't reflect their true earning power. See our detailed [[bank statement mortgage](/blog/bank-statement-mortgage-guide) guide](/blog/bank-statement-mortgage-guide) for more.

4. Asset Depletion Loans

If you've built substantial savings or investments:

Qualifying income is calculated by dividing your total eligible assets by a set number of months (typically 360 for a 30-year loan)
No traditional income verification needed
Requires significant liquid assets

Best for: Established freelancers with large savings who may show low income on tax returns. Learn more in our asset depletion mortgage guide.

5. Non-QM Loans

"[Non-Qualified Mortgage](/blog/non-qm-loan-guide)" programs designed for borrowers who don't fit traditional boxes:

Flexible income documentation
1099 income-only programs available
Profit and loss statement programs
Higher rates but more accessible
Down payment requirements of 10% to 25%

Best for: Freelancers who can't qualify through traditional channels.

How to Prepare Your Freelance Mortgage Application

12+ Months Before Applying

Decide on your deduction strategy with your CPA — balance tax savings against qualifying income
Separate business and personal finances — use dedicated business bank accounts
Maintain consistent deposits — irregular large deposits raise red flags
Build or maintain your credit score — aim for 720+ for the best terms. See our [[credit score tiers](/blog/credit-score-ranges-explained) guide](/blog/mortgage-credit-score-tiers)
Save aggressively — freelancers benefit from larger down payments and reserves
Document everything — invoices, contracts, bank statements, tax payments

3–6 Months Before Applying

Gather two years of tax returns — personal and business, all schedules
Prepare a year-to-date profit and loss statement — ideally prepared or reviewed by a CPA
Organize bank statements — 12 to 24 months for all accounts
Get your business license and any professional certifications in order
Write a business description — some lenders request a brief description of what you do and who your clients are
Pull your credit reports and dispute any errors

At Application Time

Refer to our [[mortgage application checklist](/blog/mortgage-application-checklist-2026)](/blog/mortgage-application-checklist-2026) for the complete document list, but freelancers should pay special attention to:

CPA letter — a letter from your accountant verifying your self-employment and income can strengthen your application
Client contracts — showing ongoing work commitments demonstrates income stability
Business bank statements — separate from personal accounts
1099 forms — from all clients for the past two years
Quarterly tax payment records — shows the IRS recognizes your income level

Strategies to Strengthen Your Application

Increase Your Qualifying Income

Reduce discretionary deductions in the year or two before applying
Add back non-cash expenses — depreciation, amortization, and depletion are added back to your net income
Ensure income is trending upward — declining income is a red flag; stable or increasing income is ideal

Reduce Your DTI Ratio

Pay off debts — especially car loans, student loans, and credit cards with minimum payments
Don't take on new debt before applying
Consider paying off small debts entirely — eliminating a $200/month car payment changes your DTI significantly

Make a Larger Down Payment

A larger down payment reduces your loan amount (improving DTI), eliminates PMI at 20%, and signals financial stability to lenders. Explore all your options in our down payment sources guide.

Use a Co-Borrower

If your spouse or partner has W-2 income, combining applications can strengthen the overall profile. The W-2 income provides stability that offsets the variability of freelance income.

Get Pre-Approved Early

Pre-approval identifies potential issues before you're under contract pressure. Use our preapproval checklist to get started.

Common Freelancer Mortgage Mistakes

Maximizing deductions right before applying — great for taxes, terrible for mortgages
Mixing personal and business accounts — makes income verification a nightmare
Not having two years of self-employment — the most common disqualifier
Ignoring the trailing year — if Year 2 income dropped significantly from Year 1, lenders may use the lower amount
Large cash deposits without documentation — freelancers who receive cash payments need meticulous records
Applying at the wrong lender — not all lenders are experienced with self-employed borrowers
Changing business structure during the application process — switching from sole proprietor to LLC mid-application creates complications

Working With the Right Lender

Not all lenders handle freelance applications equally. Look for:

Experience with self-employed borrowers — ask how many they close per month
Knowledge of bank statement and non-QM programs — flexibility is key
Manual underwriting capability — automated systems often reject freelancers unfairly
Reasonable documentation requirements — some lenders request excessive paperwork

A mortgage broker can be especially valuable for freelancers because they have access to multiple lenders and know which ones are most freelancer-friendly. See our broker vs. direct lender comparison.

Freelancers With Less Than Two Years of History

If you've been freelancing for less than two years, your options are limited but not zero:

Related field experience — if you were employed in the same field before freelancing, some lenders will count that history. Example: a graphic designer who worked at an agency for three years then went freelance after one year.
FHA exception — FHA guidelines allow less than two years of self-employment with strong compensating factors (excellent credit, large reserves, low DTI)
Bank statement loans — some require only 12 months of statements
Wait and prepare — if you're six months away from the two-year mark, use that time to optimize your financial profile

Gig Workers vs. Traditional Freelancers

If your freelance income comes primarily from gig platforms (Uber, DoorDash, Instacart, Fiverr), additional considerations apply. Check out our dedicated [[mortgage for gig workers](/blog/mortgage-for-gig-workers) guide](/blog/mortgage-for-gig-workers) for platform-specific strategies.

Final Thoughts

Getting a mortgage as a freelancer requires more preparation than a traditional W-2 application, but it's absolutely achievable. The freelancers who get approved easily are the ones who plan ahead — optimizing their tax strategy, organizing their documentation, and choosing the right loan program for their situation.

Start preparing at least 12 months before you plan to apply. Work with a CPA who understands the mortgage qualification process, and choose a lender experienced with self-employed borrowers. The effort you put into preparation directly translates to better loan terms and a smoother closing process.

Mortgage For Freelancers

Key Takeaways