Here are alternative ways to qualify for a mortgage without using tax returns:
🏦 1. Bank Statement Loans
How it works: Lenders review 12–24 months of your business or personal bank statements to calculate your average monthly deposits (as income).
Used for: Self-employed borrowers, business owners, gig workers, freelancers.
What they look at:
Deposit history and consistency
Business expenses (they’ll apply an expense factor, usually 30–50%)
No tax returns or W-2s required.
💳 2. Asset Depletion / Asset-Based Loans
How it works: Instead of income, your assets (like savings, investments, or retirement funds) are used to demonstrate repayment ability.
Used for: Retirees, high-net-worth individuals, or anyone with substantial savings but limited current income.
Example: $1,000,000 in liquid assets might qualify as $4,000–$6,000/month “income” (depending on lender formula).
🧾 3. P&L (Profit and Loss) Statement Only Loans
How it works: Lender uses a CPA- or tax-preparer-prepared Profit & Loss statement instead of tax returns.
Used for: Self-employed borrowers who can show business income trends but don’t want to use full tax documents.
Usually requires: 12–24 months in business + CPA verification.
🏘️ 4. DSCR (Debt Service Coverage Ratio) Loans
How it works: Common for real estate investors — qualification is based on the property’s rental income, not your personal income.
Formula:
Gross Rent ÷ PITI (Principal + Interest + Taxes + Insurance)
DSCR ≥ 1.0 means the property “covers itself.”
No tax returns, W-2s, or employment verification needed.
💼 5. 1099 Income Loan
How it works: Uses your 1099 forms (from contract work, commissions, or freelance income) as income documentation instead of full tax returns.
Used for: Independent contractors, salespeople, consultants, etc.
Often requires: 1–2 years of consistent 1099 income.
Higher down payment and interest rate required.
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