Self-employed
FHA loans for self-employed borrowers
Contractors, owner-operators, salon owners, rideshare drivers, and small business owners get told no a lot. FHA underwriting has room for you — if the file is built correctly.
What it is
FHA treats self-employment as ordinary income when it can be documented and shown to be stable. Underwriters generally average two years of tax returns, add back non-cash deductions like depreciation and depletion, and look at year-to-date business performance. A one-year history can work when you have prior related employment. Because FHA also allows higher debt ratios and compensating factors, self-employed borrowers frequently qualify here after being declined for a conventional loan on income calculation alone.
Who it's for
- Sole proprietors, LLC members, and S-corp owners
- 1099 contractors and gig workers with two years of filings
- Business owners who show low net income after deductions
- Borrowers declined conventionally over income documentation
The 3.5% down rule, in plain English
FHA's headline benefit is a 3.5% minimum down payment with a credit score of 580 or higher. Below 580, the minimum is 10%. Down payment funds can come from savings, a documented gift from family, or an eligible Texas down payment assistance program. FHA also allows a higher debt-to-income ratio and shorter waiting periods after a past credit event than most conventional programs.
Qualification checklist
- Two years of personal (and business, if applicable) tax returns
- Year-to-date profit and loss statement, and a balance sheet for corporations
- Business license or CPA letter verifying the business is active
- Two to three months of business bank statements
- Expect add-backs for depreciation — bring the full return, not just page one
This site is not affiliated with or endorsed by HUD, the FHA, or any government agency. Rate and payment examples are estimates for illustration only. Rates are subject to change and this is not a commitment to lend. Actual APR depends on credit, occupancy, loan amount, and property details.