Is a self employed mortgage in Michigan harder to get than a traditional home loan? Not necessarily — it simply requires more documentation than a W-2 borrower provides. Most Michigan lenders want two years of self-employment history, either full tax returns or a year-to-date profit and loss statement, and in many cases a bank statement loan that qualifies you on business deposits instead of tax returns. With the right paperwork and a loan officer who understands business income, self-employed buyers land a self employed mortgage in Michigan every week.
What Documents Do You Need for a Self Employed Mortgage in Michigan?
Underwriters need a clear, consistent picture of your income before approving a self employed mortgage in Michigan. For most business owners, that means gathering:
- Two years of personal tax returns, all schedules included
- Two years of business tax returns, if you file separately (partnership, S-corp, or corporation)
- A year-to-date profit and loss statement, often prepared by your CPA or bookkeeper
- A CPA letter or business license verifying two years of self-employment
- Recent business and personal bank statements
- A list of any outstanding business debts
The Consumer Financial Protection Bureau offers general guidance on documenting income for any mortgage application, which is a useful starting point before you gather your own paperwork.
How Many Years of Self-Employment Do Lenders Require?
As a general rule, lenders want to see at least two years of self-employment in the same line of work before approving a self employed mortgage in Michigan. This history lets underwriters average your income across both years and smooth out any single strong or weak year. If your income has grown or your business has changed structure, be ready to explain the story behind the numbers — a good loan officer can often present a stronger case than the raw tax returns alone.
How Do Tax Write-Offs Affect Your Qualifying Income?
This is the part that surprises most self-employed buyers: the same write-offs that lower your taxable income also lower the income a lender can use to qualify you. A business owner who nets $120,000 but writes off $40,000 in legitimate expenses is typically qualified on a number much closer to $80,000, not $120,000. In the two years before you apply, it’s worth talking to your CPA about how upcoming deductions might affect your ability to qualify, since minimizing taxes and maximizing qualifying income can pull in opposite directions.
What Is a Bank Statement Loan and How Does It Help Self-Employed Borrowers?
A bank statement loan is a non-QM (non-qualified mortgage) program that lets you qualify using 12 to 24 months of business or personal bank deposits instead of tax returns. That makes a self employed mortgage in Michigan possible even when your tax returns show a lower net income than your actual cash flow, since write-offs never enter the equation. The trade-off is that bank statement programs typically ask for larger cash reserves after closing and may carry a slightly higher rate than a comparable W-2 loan. For a full breakdown of how these programs work, see our complete self-employed mortgage guide.
How Much Down Payment Do You Need for a Self Employed Mortgage in Michigan?
Down payment requirements don’t change just because you’re self-employed. You still have access to the same standard programs:
- Conventional loans: as low as 3% down, depending on the program and your credit
- FHA loans: as low as 3.5% down, depending on your credit score
- Down payment sources: savings, gifts, or eligible down payment assistance programs
What does change is that bank statement and other non-QM programs may require more reserves in the bank after closing. Your exact down payment, reserve requirement, and monthly payment will depend on your rate, credit, and down payment — those numbers are worth running individually rather than guessing.
Michigan Example: What a Self Employed Mortgage in Michigan Might Look Like
Here’s a simplified, illustrative example — not a quote. Assume a self-employed graphic designer in Grand Rapids shows a two-year average qualifying income of $90,000 after standard write-offs, wants to buy a $325,000 home, and plans to put 10% down ($32,500), leaving roughly a $292,500 loan.
- Purchase price: $325,000 (assumed)
- Down payment: 10%, or $32,500 (assumed)
- Loan amount: approximately $292,500
- Qualifying income: two-year average after write-offs
- Actual payment, mortgage insurance, and reserves depend on your rate, credit, and down payment
Two buyers with the same income and purchase price can end up with very different payments depending on your rate, credit, and down payment. Rather than relying on a rule of thumb, run your own numbers with the free Affordability Calculator, then confirm what you actually qualify for with a Michigan mortgage pre-approval.
Ready to move forward on your self employed mortgage in Michigan? The two tools below are the fastest way to turn these assumptions into real numbers for your situation.
Frequently Asked Questions
Can I get a self employed mortgage in Michigan with only one year of tax returns?
Most lenders want two full years of self-employment history and tax returns. A single year of returns plus a strong year-to-date profit and loss statement may work with certain programs, but this depends heavily on your specific situation, so it’s best discussed directly with a loan officer.
Do I need excellent credit for a self employed mortgage in Michigan?
There’s no single credit score that applies to every borrower. Your rate, program options, and down payment requirements all shift depending on your credit, so the best way to know where you stand is to get pre-approved and see your actual options.
What is the minimum down payment for self-employed borrowers?
Down payment minimums are the same as for any other buyer — as low as 3% on conventional loans or 3.5% on FHA loans, depending on the program and your credit. Some non-QM programs may have different minimums or reserve requirements.
Are bank statement loans only for self-employed borrowers?
Bank statement loans are designed primarily for self-employed borrowers and business owners whose tax returns, after write-offs, don’t fully reflect their actual cash flow. They’re a non-QM alternative to traditional income documentation, not a replacement for every borrower’s loan.
How is a self employed mortgage in Michigan different from a regular mortgage?
A self employed mortgage in Michigan follows the same basic approval process as any other mortgage — application, documentation, underwriting, and closing. The main difference is how you document income: tax returns and a profit and loss statement, or bank statements under a non-QM program, instead of pay stubs and a W-2.
Written by Edward Kalavitz — Licensed Michigan Mortgage Loan Originator (NMLS #138424) and Realtor, serving all 83 Michigan counties for 25+ years.