Self-Employed Less Than Two Years
If your business is between one and two years old, FHA, Fannie Mae and at least one other program can still count your self-employment income. The key is showing you did the same kind of work before you went out on your own.
What a newer business needs to show
Lenders look at how long the business has run and what you did before it.
- FHA can count self-employment income after one to two years if you worked at least two years before that in the same line of work or a related occupation.
- Fannie Mae can consider less than two years of self-employment when your most recent signed tax returns show a full 12 months of income from the current business.
- At least one bank statement program accepts more than one year in business when you document two years of prior work in the same line of work.
- That same program also accepts one year of prior work plus one year of formal education or training in the same line of work.
- Under-two-year options exclude super jumbo loans at one program*
- Licensed professionals, such as medical, legal and accounting, can qualify in at least one program once the business is more than one year old.
Income can count after 12 months
Your prior work experience counts
Education and training can help
A path for licensed professionals
Bank statement options stay open
Second mortgages can work too
How Newer Businesses Get Reviewed
Underwriters weigh your time in business against the work you did before it.
Fannie Mae and FHA generally look for two years of self-employment. When you have less, the review shifts to your prior work. FHA asks for at least two years in the same line of work or a related occupation. Fannie Mae looks for prior income at the same or greater level, in a field that provides the same products or services or in a job with similar responsibilities.
Timing matters. Fannie Mae wants your most recent signed personal and business tax returns to show a full 12 months of income from the current business. FHA averages your income over the time you have earned it when that is less than two years.
Bank statement programs can work too. At least one accepts more than one year in business when you document two years of prior work in the same line of work, or one year of prior work plus one year of formal education or training. In that program, the business should have existed for as long as you have been self-employed. At least one second mortgage program also accepts 18 months of self-employment with three years of prior experience in the same line of business.
Why choose Saxton for a newer business
This page is for business owners who have been self-employed for more than one year but less than two.
Your Past Work Counts
Under FHA rules, two years in the same or a related line of work can carry a business that is one to two years old. We document that history with you up front.
Education Can Fill A Gap
At least one program accepts one year of prior work plus one year of formal education or training in the same line of work. That helps if you went to school for the trade you now run.
Licensed Pros Have A Path
If you work in a licensed profession such as medical, legal or accounting, at least one program accepts a business more than one year old. You need two years of documented experience in the same profession or formal education in a related field.
Tax Returns Or Bank Statements
We can look at a tax return route or a bank statement route. At least one bank statement program accepts 18 months of self-employment with three years of prior experience in the same line of business.
Changed Your Business Structure
Moving from a sole proprietorship to a corporation does not have to reset your clock. At least one program accepts the change when the business name and ownership percentage stayed the same and the business has run for two full years.
Straight Answers On Timing
If your business is under one year old, we will tell you plainly. At least one guideline says income from less than one year of self-employment may not be considered effective income.
Hear From Homeowners Like You
Frequently Asked Questions
Short answers for business owners with one to two years of history.
Yes, one program accepts 18 months of self-employment if you also bring three years of earlier work in that line of business and a credit score of 700 or more. The same route is open on that program’s closed-end second mortgage.
Often two years. FHA asks for at least two years in the same line of work or a related occupation. At least one bank statement program also accepts one year of prior work plus one year of formal education or training in the same line of work.
Usually not on that income. At least one guideline says income from less than one year of self-employment may not be considered effective income. Fannie Mae looks for a full 12 months of self-employment income on your most recent tax returns.
Yes, at one program bank statements replace tax returns when your business has operated a year or more, deposits hold steady month to month and you have spent five years in that industry. That industry history is proven with a business license covering five years or a letter from your CPA. Tax returns are not used and should not be in the file.
Often not. At least one program makes its P&L Only option ineligible with less than two years in the current business. Another requires the P&L preparer to confirm you have been self-employed for the most recent 24 months.
A 700 minimum score applies at one program to both of its routes for businesses under two years old, the 18-month route and the licensed-professional route. Standard files at that same program start at 660, so the newer business raises the bar by 40 points.
Yes. If you work in a licensed profession such as medical, legal or accounting, at least one program accepts a business more than one year old. You need two years of documented experience in the same profession or formal education in a related field.
Saxton Mortgage does. At least one conventional program we offer can count self-employment income with less than two years in business, when your latest tax returns show a full 12 months from the current business and you earned similar income in the same field before.
Find out what you qualify for
Tell us how long your business has run and what you did before it, and we will check how it fits our programs.
Get Pre-Qualified- Fannie Mae, Selling Guide B3-3.5-01, underwriting factors and documentation for a self-employed borrower
- Consumer Financial Protection Bureau, what is the ability-to-repay rule?
Loan amounts, rates, terms, and eligibility are subject to credit approval, asset and income verification, appraisal, and program guidelines. Program availability varies by state. Not all applicants will qualify. Saxton Mortgage, LLC is an Equal Housing Lender.