Mortgage Financing for Self-Employed Contractors in Richmond, Virginia

Scan the guides linked below, find the one that matches how your income is documented — bank statements, 1099s, P&L, or a mix — and follow it straight to the application checklist. If you're still figuring out which loan type fits, the orientation below will cut through the noise.

What to know before you pick a path

Richmond's construction market runs on independent operators: framing crews, electrical subs, general contractors, and specialty tradespeople who file Schedule C or run S-corps and LLCs. The common thread is that tax returns show a fraction of what hits the bank account, and that gap is what trips up conventional underwriting.

Why conventional loans are harder for contractors

Conventional and FHA lenders use your adjusted gross income from the last two years of federal returns, averaged, to calculate qualifying income. If your Schedule C shows $210,000 in revenue but $130,000 in legitimate business deductions, the lender sees $80,000 — roughly $6,700 a month. At a 43–50% debt-to-income ceiling, that limits you to a payment most Richmond buyers would find too low for current price points. Deductions that protect you at tax time actively work against you at the loan desk.

The non-QM alternatives

Program	What qualifies you	Typical rate premium	Min. FICO
Bank statement mortgage	12 months of deposits, averaged	+1–2 pts above conventional	620–640
1099-only loan	Two years of 1099s, no returns	+1–2 pts above conventional	620–640
P&L loan	CPA-prepared profit & loss, 12–24 months	+1.5–2.5 pts	640+
Asset depletion	Liquid assets divided over loan term	Varies	680+

The bank statement and alt-doc mortgage programs that have expanded nationally since 2020 are now accessible to Richmond borrowers through a growing list of non-QM lenders — many of whom operate remotely and are licensed in Virginia. Closing timelines run 30–45 days, comparable to a conventional loan if your documents are organized.

What separates borrowers who close from those who don't

Credit score is the first filter. A 700+ FICO gets you to the best non-QM rate tiers. Scores in the 640–679 range still qualify for most programs but carry a rate penalty of 2–4 percentage points — on a $400,000 loan, that's a meaningful monthly difference. Pull your reports before you apply; roughly one in five credit reports contains a scoreable error worth disputing.

Cash reserves are the second filter. Non-QM lenders want 6–12 months of mortgage payments in liquid accounts after your down payment clears. A contractor with $90,000 in a business checking account and $40,000 in a personal account clears this bar easily — the lender just needs to see the statements.

Income consistency is the third. Two strong years beat one blowout year. If 2025 was significantly higher than 2024, a lender averaging both may discount the spike; a 1099-only program that uses the most recent year's figure can sometimes produce a better qualifying number.

FHA vs. conventional for contractors in 2026

FHA loans require tax return income documentation — the same adjusted gross income problem applies. They're not disqualifying, but they rarely solve the write-off problem. Where FHA helps is credit: borrowers at 580 can qualify with 3.5% down. Contractors with solid bank deposits but fair credit sometimes pair an FHA loan with a seller credit to offset the mortgage insurance cost. Other markets, like the self-employed mortgage strategies documented for contractors in places like Albuquerque, show how local market conditions affect which program pencils out — Richmond's competitive resale inventory creates similar tradeoffs.

Freelancers and gig-economy workers face structurally similar documentation challenges, and the qualifying strategies developed for 1099 workers across income types apply directly to construction contractors — particularly the approach of using two years of 1099s rather than Schedule C net income when the two diverge sharply.

What Richmond lenders watch in 2026

Virginia has no state-level non-QM restrictions beyond federal ATR (ability-to-repay) rules, so lenders operating here have full access to bank statement, asset depletion, and DSCR products. Richmond's home prices in established neighborhoods like The Fan, Bon Air, and Midlothian have held, which means loan amounts frequently require non-conforming (jumbo) thresholds — another reason non-QM lenders, who already operate outside agency guidelines, are often the right starting point rather than a fallback.