Texas Mortgage Broker for Self-Employed Borrowers

I’m Caleb Adams, a mortgage broker licensed in Texas, Utah, and Idaho. I’m based in northern Utah, and I work with self-employed buyers across Texas remotely: business owners, 1099 contractors, freelancers, and commission earners in Dallas-Fort Worth, Austin, Houston, San Antonio, and everywhere in between.

Self-employed borrowers are a big part of what I do, and my background is in accounting (I have an accounting degree and an MBA). I read tax returns, P&Ls, and bank statements the way an underwriter does, which means I can usually tell you early which path will work before you spend weeks on the wrong one.

Why self-employed buyers get stuck

The problem is almost never that you don’t earn enough. It’s that your tax returns are designed to show as little taxable income as possible, and a traditional mortgage qualifies you on that same taxable number. Depreciation, vehicle expenses, a home office, equipment purchases: every legitimate write-off lowers your tax bill and your qualifying income at the same time.

Conventional guidelines also generally want a two-year history of self-employment income. Fannie Mae allows one year of returns in some cases, but only when the business has existed for five years and you’ve owned 25% or more of it for that whole period. I wrote more about this in how self-employed tax write-offs affect your mortgage and how underwriters calculate self-employed income.

The good news: there are several ways to document income, and as a broker I can shop them across many wholesale lenders instead of being stuck with one bank’s rules.

Loan options for self-employed Texas buyers

Full-documentation conventional or FHA

If your tax returns already support the payment you need, this is usually the lowest-cost route. I’ll review your returns first, including add-backs like depreciation that underwriters can count, before we look at anything else.

Bank statement loans

A bank statement loan is a non-QM program that qualifies you on 12 or 24 months of deposits instead of tax returns. With personal statements, qualifying deposits are generally averaged at or near full value. With business statements, the lender applies an expense factor that varies by lender and industry, and some lenders will use your actual expense ratio if your CPA documents it. The same deposits can produce very different qualifying income depending on the lender. My guide to how bank statement loans work walks through the math.

P&L-only loans

Some non-QM lenders will qualify you on a profit and loss statement, typically prepared or signed by a CPA or licensed tax preparer, sometimes paired with a couple of months of bank statements. Requirements vary a lot between lenders, which is exactly where shopping matters.

1099 income loans

If you’re paid on 1099s rather than running a business with heavy expenses, some programs qualify you on your 1099 income with a standard expense factor instead of full tax returns. This can work well for contractors, real estate agents, and other commission earners.

DSCR loans for Texas rentals

If you’re buying an investment property rather than a home to live in, a DSCR loan qualifies based on the property’s rental income instead of your personal income. See DSCR vs. conventional investment loans.

Non-QM loans usually carry higher pricing and larger down payments than conventional loans, and lenders still want to see an established business, typically around two years. If you’ve been self-employed for less time, read the truth about the two-year rule. You can see all of my programs on the self-employed home loans page.

Texas-specific rules self-employed buyers should know

No state income tax, higher property taxes

Texas does not have an individual income tax, which is part of why so many business owners set up shop there. The trade-off shows up in your mortgage payment: the Tax Foundation puts Texas’s effective property tax rate on owner-occupied homes at 1.40%, one of the higher rates in the country. When I qualify you, property taxes are often a larger share of the payment than buyers moving from other states expect, so I estimate them carefully for the specific address.

The homestead exemption

Texas school districts are required to give a $140,000 residence homestead exemption, according to the Texas Comptroller, with an additional $60,000 for homeowners 65 and older or disabled. You apply through your county appraisal district after you buy. It lowers your school tax, which is often the largest piece of the bill, so file for it as soon as you’re eligible.

Texas cash-out and home equity rules: Section 50(a)(6)

Texas protects homesteads more strictly than most states. If you already own a home in Texas and want to pull equity out, whether through a cash-out refinance or a home equity loan, it falls under Article XVI, Section 50(a)(6) of the Texas Constitution. The main rules:

• Total debt against the homestead can’t exceed 80% of fair market value.
• Only one 50(a)(6) loan can be made in a 12-month period.
• You must receive a written notice at least 12 days before closing.
• Fees you pay are capped at 2% of the loan amount, excluding items like the appraisal, survey, and title insurance.
• The loan must close at the office of the lender, an attorney, or a title company.
• You have three days after closing to rescind without penalty.
• Each owner and each owner’s spouse must consent, and the loan is non-recourse against you personally.

Since the 2017 amendments that took effect January 1, 2018, you can also refinance an existing 50(a)(6) loan into a regular loan without the home equity restrictions if at least a year has passed, you take no new cash, the loan is 80% or less of value, and you receive a 12-day notice. Self-employed homeowners using a bank statement or P&L program for a cash-out need a lender that offers Texas 50(a)(6) on that product, and not all do. That’s another reason to shop.

How I work with Texas clients remotely

1. Discovery call. By phone or video, we talk about your business, how you’re paid, and what you want to buy.
2. Income review. You send your last two years of returns and 12 to 24 months of bank statements. I run the numbers under each program so you see which one gives you the strongest approval at the lowest cost.
3. Pre-approval. You get a pre-approval letter your Texas agent can submit with offers.
4. Contract to close. Disclosures are sent electronically. I work with your agent and the Texas title company handling your closing, and I keep you updated until you sign.

Frequently asked questions

Can a mortgage broker outside Texas do my Texas home loan?

Yes, if they’re licensed in Texas. I hold an active Texas license, and you can verify it on NMLS Consumer Access using my NMLS number, 2281316. We work by phone, video, and secure document upload, and you close with a Texas title company.

How many months of bank statements do I need for a bank statement loan in Texas?

Most programs use 12 or 24 months of personal or business statements. The right choice depends on your deposit history. If your recent year was stronger, 12 months may produce higher qualifying income. If it was uneven, 24 months can smooth it out.

I’m self-employed in Dallas, Austin, or Houston. Is the process different by city?

The loan programs are the same statewide. What changes is the price of homes and the property tax rate at the specific address, which vary by county, city, school district, and special districts. I estimate taxes for the exact property when we run your payment.

Can I get a Texas cash-out refinance with a bank statement loan?

Possibly. It has to meet Texas Section 50(a)(6) rules, including the 80% limit and 12-day notice, and the lender has to offer 50(a)(6) on its bank statement program. Only some do, so I’ll look for one that fits your situation.

Do I need a CPA letter?

It depends on the program and lender. Some bank statement and P&L lenders ask for a CPA or tax preparer letter to confirm your business or your expense ratio. I’ll tell you exactly what’s needed before you ask your CPA for anything.

Self-employed and buying in Texas? Book a call with me, and we’ll look at your income under every program and find the path that fits your business.

Caleb Adams, NMLS #2281316. First Class Home Mortgage, NMLS #1843. Terms, programs, and eligibility vary; not all applicants will qualify. This is not a commitment to lend.