Self-employed

Self-employed? How to prove your income for a mortgage

Mortgage lenders want two years of returns, and they check them with the IRS. What they count, why write-offs can shrink it, and what to do about it.

Updated October 2026 · 7 min read

A mortgage is the strictest proof of income there is. Lenders don't just read what you send. They check it with the IRS. That's good news if your returns are filed and honest, because then the paperwork does the arguing for you.

What a mortgage lender will ask for

• –Two years of filed tax returns, all pages and schedules.
• –Signed IRS Form 4506-C, which lets the lender pull your transcripts straight from the IRS and compare them with your copies.
• –Two years of self-employment history, in the same line of work.
• –Recent bank statements, usually two months.
• –Sometimes a year-to-date profit-and-loss statement, or a letter from a CPA confirming your business.

What they count as your income

Lenders start with your profit on Schedule C, line 31, and usually average it over two years. If this year's profit is lower than last year's, many will use the lower number, or ask why it dropped.

Some deductions don't cost you any cash that year, so lenders often add them back. Depreciation is the common one, including the part of the standard mileage rate that counts as depreciation, and business use of your home. Ask your loan officer to run the add-backs; it can raise your qualifying income.

The write-off trade-off

Every write-off that lowers your tax also lowers the income a lender sees. That's not a reason to skip deductions you earned. It's a reason to plan: if you're buying in the next two years, talk to your loan officer before you file, not after.

If your returns don't show enough

• –Bank-statement loans qualify you on 12 to 24 months of deposits instead of tax returns. They're real, but they cost a higher rate and a bigger down payment.
• –A co-borrower with W-2 income can carry part of the qualifying.
• –Waiting one more year of steady, filed profit often gets the normal rate.

Missing a year?

A lender can't approve on a year you haven't filed, because there's no IRS transcript to check. If a year is missing, file it first. It's the one step every other step depends on.