Mortgage Financing for Self-Employed Contractors in McKinney, Texas

Scan the options below, pick the one that matches how you document your income, and go straight to that guide — the orientation below is for readers who need the lay of the land before choosing.

What to know before you pick a loan path

McKinney's housing market draws plenty of construction-trade buyers, and the challenge is almost always the same: your tax returns look worse than your actual cash flow. Every legitimate write-off that reduces your tax bill also reduces the income a conventional underwriter will count. That gap is why the right loan type matters more than the interest rate headline.

The four realistic paths for contractors in 2026

Loan type	Income proof	Typical down payment	Best fit
Bank statement mortgage	12–24 months deposits	10–20%	Stable-revenue sole props and LLCs
1099-only / alt-doc	1099s + CPA P&L	10–20%	Subcontractors with clean 1099 records
Conventional (Fannie/Freddie)	2 years tax returns + YTD P&L	3–20%	Contractors whose net income qualifies after write-offs
DSCR (investment property)	Property cash flow only	20–25%	Contractors buying a rental, not a primary residence

Bank statement loans are the most-used path here. Lenders average 12–24 months of deposits, apply an expense factor (commonly 50% for sole props, 15–40% for LLCs with a CPA letter), and derive a qualifying income. Rates run 1–2 percentage points above conventional — a real cost, but often the only way to avoid having two years of high-net-income returns.

Conventional loans are cheaper when they work. The minimum FICO is 620–640, and underwriters want two years of self-employment returns plus a year-to-date profit-and-loss. If your Schedule C or S-corp K-1 net income supports the payment after add-backs, conventional is worth pursuing first. The sticking point for most construction owners is that depreciation, vehicle deductions, and subcontractor expenses legally hollow out net income.

Alt-doc and no-tax-return mortgage options cover the middle ground — lenders who accept 1099 transcripts, a CPA-prepared P&L, or 12 months of personal bank statements instead of full returns. These sit under the non-QM umbrella and close in roughly 30–45 days, comparable to a conventional loan.

What trips people up

• Income calculation method. Every lender picks their own expense ratio for bank statement loans. A 50% haircut on $20,000/month deposits yields $10,000 qualifying income; a 40% haircut yields $12,000. That $2,000 difference changes what purchase price you can support.
• Reserves. Non-QM lenders want 6–12 months of PITI in liquid reserves at closing — not just at application. Contractors who keep cash in the business account need to season those funds in a personal account for 60 days before closing.
• Self-employment history. Most lenders want 24 months of self-employment in the same field. If you incorporated or changed entity type recently, a lender may require a CPA letter confirming continuity of the same trade.
• DTI ceiling. Your total monthly debt — including the new mortgage — generally can't exceed 43–50% of your qualifying gross monthly income. On a bank statement loan, qualifying income is already discounted, so this ratio tightens fast if you carry vehicle or equipment debt.

The same documentation headaches show up for freelance and gig-economy borrowers across industries; strategies built around irregular 1099 income apply directly to construction subcontractors and sole-prop GCs.

McKinney-area buyers should also know that Collin County conforming loan limits follow the national baseline for 2026. If your target home price pushes into jumbo territory, non-QM jumbo bank statement products exist but typically require a 720+ FICO and 20%+ down.

Contractors researching programs in other Texas metros — including the Amarillo, TX market — will find that lender availability and non-QM overlays vary by market even within the same state, so local lender relationships matter.

Review the guides linked below for the specifics of the path that fits your situation: documentation requirements, lender types active in the McKinney area, and how to prep your file before you apply.