- Been there, honestly.
- Refinanced last year—my CPA and I spent hours digging up docs they “might” need.
- Had to explain every single Venmo transfer and random deposit, even though none were business income.
- Tech made uploading easier, but the questions just got weirder.
- Do lenders ever actually look at cash flow or just the tax forms? Sometimes I wonder...
Title: Why Is Getting a Mortgage So Hard When You're Self-Employed?
- Not gonna lie, I get the frustration. But I’ve actually had a few lenders who did care about cash flow—at least, they pretended to.
- Last time I applied, they wanted my last two years’ tax returns, sure, but then they also asked for like six months of bank statements, P&Ls, and even a letter from my bookkeeper.
- Here’s the kicker: one underwriter actually called me to ask why my business checking account had a $12 charge from “Taco Palace.” (Apparently, tacos aren’t a deductible business expense unless you’re in the taco business. Who knew?)
- I think the tech helps with uploading, but it also makes them ask for more stuff just because they can. It’s like, “Hey, you uploaded your P&L? Cool, now send us a breakdown of every single line item.”
- The Venmo thing is wild. I once had to explain a $50 transfer from my cousin for concert tickets. They flagged it as “unexplained income.”
- But to be fair, I’ve had one or two lenders who actually looked at my cash flow and seemed to get that self-employed income isn’t always neat and tidy. They still wanted the tax forms, but at least they didn’t treat every random deposit like I was laundering money.
- In my experience, smaller local banks or credit unions are a bit more flexible than the big guys. They’ll actually talk to you, not just email a checklist of 47 documents.
- Still, I swear the process is designed to make you question every life choice that led you to self-employment. Maybe next time I’ll just start a W2 side hustle for the paperwork alone...
I’ve run into the same wall. Last year I tried to get pre-approved and it felt like they wanted a DNA sample along with every bank statement I’ve ever had. They even questioned a $20 PayPal transfer from my sister—apparently “birthday money” doesn’t fly as an explanation. I get that they need to be thorough, but at some point it just feels like busywork. I did notice credit unions seemed less rigid, but still, the whole process made me rethink how I track my expenses.
They even questioned a $20 PayPal transfer from my sister—apparently “birthday money” doesn’t fly as an explanation.
That made me laugh, because I had to explain a Venmo payment labeled “pizza” (it was literally for pizza). It’s wild how granular they get. I started keeping a spreadsheet just to track random transfers, but honestly, it’s exhausting. Credit unions did seem a bit more chill, but still wanted two years of tax returns and every 1099 under the sun. Makes me wonder if it’s even worth trying again next year or if I should just keep renting for now...
It’s wild how deep they dig, right? I’ve seen folks get flagged for things like splitting a dinner bill or even just moving money between their own accounts. The spreadsheet idea is actually pretty smart, even if it’s a pain—lenders love paper trails. But yeah, the process can feel like a full-time job, especially if your income isn’t the same every month.
If you’re thinking about trying again next year, maybe start prepping now—keep those records tidy, stash away any docs you think might come up, and try to limit random transfers if you can. Some people I’ve worked with have even opened a separate account just for business stuff, so their personal transactions don’t get mixed in. Not saying it solves everything, but it can make things less confusing when the underwriter starts asking questions.
Out of curiosity, did you ever look into bank statement loans or other non-traditional options? They’re not for everyone (rates can be higher), but sometimes they’re less strict about the little stuff. Just wondering if anyone here’s had luck with those...
