Mortgage Financing for Self-Employed Contractors in Cary, NC

Scan the situations below, pick the one that fits your income picture, and go straight to that guide — each one covers the documentation, down payment, and lender type that matches where you are right now.

What to know before you choose a loan path

Most Cary contractors run into the same wall: their tax returns show far less income than their bank accounts do. That gap — created by legitimate write-offs for tools, trucks, insurance, and subcontractors — disqualifies them from conventional financing even when their business is healthy. The guides linked here are built around that reality. Here is what separates the main options.

Bank statement mortgages

Instead of Schedule C net income, lenders average 12 months of business bank deposits and apply an expense factor (typically 50% for sole proprietors, lower for S-corps). If your gross deposits support the payment, you qualify — write-offs don't count against you. Rates run roughly 1–2 percentage points above a comparable conventional loan. You'll need a 620 minimum FICO, though lenders competing in the Triangle market often look harder at files in the 660–700 range. Expect 10–20% down and 6–12 months of liquid cash reserves post-closing.

Who it fits: Sole proprietors and single-member LLCs with strong gross revenue but heavily reduced AGI after deductions. The most common path for construction trade owners.

1099 income / alt-doc loans

If you work as a 1099 subcontractor rather than running a formal business entity, lenders can average two years of 1099s — no tax return required. Qualification math is closer to W-2 underwriting, but you bypass the Schedule C problem entirely. These alt-doc mortgages generally price between bank statement and conventional rates, depending on the lender and your credit profile.

Who it fits: Trade contractors paid on 1099 whose gross 1099 income clearly covers the payment, and who have a consistent client base rather than lumpy project revenue.

Conventional loans with full documentation

If you've been self-employed for at least two years and your net income after write-offs still clears the debt-to-income ceiling (43–50% of qualifying gross), conventional financing gives you the lowest rate and the widest lender pool. The trade-off: every dollar of write-off reduces qualifying income. Many contractors find they can't get there without restructuring deductions a year or two before they plan to buy — a move worth coordinating with a CPA who understands quarterly tax planning for variable income earners.

Who it fits: Contractors whose businesses are profitable on paper, not just in cash flow — or those willing to hold off and restructure their taxes first.

FHA for contractors

FHA loans accept 3.5% down and go to 580 FICO, but they still use AGI from your tax returns. The benefit is a slightly more flexible DTI ceiling and a forgiving view of recent credit blemishes. The downside: mortgage insurance stays for the life of the loan if you put less than 10% down, and FHA won't accept bank statements in place of tax returns.

Who it fits: Contractors with decent net income on the return, lower savings, or a past credit event — not a workaround for the write-off problem.

Key numbers at a glance

Loan type	Min FICO	Down payment	Income doc
Bank statement	620–640	10–20%	12 months deposits
1099 alt-doc	620	10–20%	2 years 1099s
Conventional	620–640	3–20%	2 years tax returns
FHA	580–620	3.5–10%	2 years tax returns

What trips people up in Cary

The Triangle market moves quickly, and pre-approval letters from lenders who haven't underwritten self-employed files before can fall apart in processing. A few patterns worth knowing:

• Deposit contamination: Personal transfers, loan proceeds, or client refunds inflate the deposit average. Lenders scrub for these; clean business accounts help.
• Business age: Most non-QM lenders want 24 months of self-employment history. Less than that and your options narrow sharply.
• Reserve requirements: Closing with bare-minimum reserves is a flag. Six to twelve months of post-closing mortgage payments in liquid accounts is the non-QM standard.
• Rate shopping: Multiple hard inquiries within a 45-day window for the same loan type are typically counted as one by scoring models — don't let fear of credit pulls stop you from comparing lenders. Contractors in comparable markets like Alexandria, VA and Albuquerque, NM face the same underwriting dynamics and benefit from the same comparison approach.

Choose your situation from the guides below and go from there.