Mortgage Financing for Self-Employed Contractors in Plano, Texas

Scan the situation descriptions below, pick the one that fits, and go straight to that guide — each one covers qualification math, lender type, and what to bring to underwriting.

If you're new to how these loans work, the orientation below will get you up to speed in under five minutes.

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What to know before you choose a loan type

Most Plano contractors hit the same wall: two years of tax returns showing write-offs that cut taxable income well below actual cash flow. A conventional underwriter reads that low number and declines the file — even when the business deposits tell a completely different story. Alternative-documentation loans exist to close that gap, but they're not interchangeable. Picking the wrong product adds cost, delays closing, or ends in another denial.

The main options — and who each one fits

• Bank statement mortgage. The workhorse for most self-employed construction professionals. Lenders average 12 months of business or personal deposits to derive qualifying income, sidestepping tax returns entirely. Rates run 1–2 percentage points above conventional. You'll need a 620–640 minimum FICO, a 10–20% down payment, and typically 6–12 months of liquid reserves sitting in an account the lender can verify. This is the right tool if your deposits are consistent and your write-offs are the only problem. Contractors in markets like Albuquerque and Arlington are running the same playbook — the product is available nationally.

• Non-QM loans (broader category). Bank statement is one non-QM product; others include asset depletion loans (income derived from investment accounts), 1099-only underwriting, and profit-and-loss statement loans prepared by a CPA. Non-QM closes in roughly 30–45 days and carries the same rate premium range. If your deposits are lumpy — common in construction where projects pay in stages — asset depletion or a P&L product may produce a higher qualifying income than averaging raw deposits. See the alt-doc mortgage guide for a side-by-side of each product's income calculation method.

• DSCR loans. Built for investment properties, not primary residences. Qualification is based on the property's rental income covering its debt service (lenders generally want 1.25× coverage), not your personal income at all. Down payments typically run 20–25%. If you're buying a rental or adding to a portfolio, this is the path — but it won't work for a primary home purchase.

• FHA loans. Government-backed and accessible with a 580+ FICO, but income must still be documented through tax returns or W-2s. Heavy business write-offs create the same problem here as with conventional loans. FHA is a fit if your taxable income is genuinely sufficient to qualify — not a workaround for the write-off issue.

• Conventional loans. Require a 620–640 minimum FICO and standard income documentation. Two years of self-employment history is required, and both years' returns are averaged. If year one was weak and year two was strong, averaging can drag down your qualifying number. Borrowers with a 700+ FICO score and straightforward returns get the best rates — but most contractors with significant write-offs won't fit this box.

The numbers that separate borrowers

Factor	Conventional / FHA	Bank Statement / Non-QM
Income documentation	Tax returns (2 yr avg)	12 months bank deposits or CPA P&L
Minimum FICO	620–640	620–640 (700+ for best rates)
Rate premium	None (baseline)	+1–2 pts above conventional
Down payment	3–5% (FHA 3.5%)	10–20% typical
Cash reserves required	2–3 months	6–12 months
Closing timeline	30–45 days	30–45 days

What trips people up

The most common mistake is showing up at a bank statement lender without separating business and personal accounts — mixed deposits force the lender to discount heavily or decline. The second most common mistake is applying with a FICO below 700 without addressing the spread first: fair-credit borrowers (640–679) pay 2–4 percentage points more across the board, compounding the non-QM premium. The third is underestimating reserves — if you're pulling cash to fund a project at the same time you're applying for a mortgage, a lender watching your balances shrink mid-process may not like what they see.

Qualification strategies for 1099 earners — including how lenders treat seasonal construction income and what a CPA-prepared P&L needs to include — are covered in depth in the freelance mortgage solutions framework built around self-employed borrower documentation. Plano-area contractors looking for parallel business financing (operating credit lines, tax financing between jobs) will also find useful context at the Plano contractor lending resource.

Choose your situation from the guides below to get the qualification math and lender criteria specific to your file.