Colorado has one of the highest self-employment rates in the country. Business owners with aggressive write-offs face a documentation challenge — Schedule C shows after-deduction income that may understate actual cash availability. The fix is choosing the right loan product.
Option 1: Full-Doc Conventional
2 years personal returns + 2 years business returns (1120S/1065/Schedule C) + YTD P&L + business bank statements. Uses 2-year average net income plus add-backs (depreciation, depletion). Works when after-deduction income is sufficient or deductions are primarily non-cash.
Option 2: Bank Statement Loans (Most Common Solution)
12 or 24 months of bank statements; lender averages deposits and applies an expense factor (50% personal, 10–40% business). Example: $25,000/mo business deposits × 75% (25% expense factor) = $18,750/mo qualifying income. At 43% DTI ≈ $8,000/mo payment ≈ ~$1.2M qualifying loan at 6.75%. Parameters: 680+ credit, 10–20% down, 0.5–1.5% rate premium (non-QM), 6–12 months reserves. See bank statement loans.
Option 3: Asset Depletion
Total liquid assets (savings, investments, retirement at 60–70%) divided by loan term in months. $2M ÷ 360 = $5,556/mo qualifying income. Works for semi-retired entrepreneurs, business sellers, strong-balance-sheet borrowers. See asset depletion.
Option 4: 1099 Loans
Average the last 24 months of 1099s. Useful for real estate agents, consultants, contractors paid on 1099.
Tax Planning and Mortgage Timing
Maximizing write-offs reduces qualifying income. If buying in the next 12–24 months, coordinate with your CPA and broker before tax season — sometimes moderating deductions one year dramatically improves buying power. We work with buyers' CPAs regularly.
Contact Tayton Capital or apply now.
📧 tj@taytoncapitalllc.com
📞 970-708-9624
Frequently asked questions
Can I get a mortgage in Colorado if I'm self-employed?
Yes. The documentation approach differs — bank statement loans, asset depletion, or full-doc conventional are all available depending on income profile.
How long do I need to be self-employed to qualify for a mortgage?
Most programs require 2 years of self-employment history. Some bank statement programs accept 1 year in the same field.
Can I use a bank statement loan for a primary residence in Colorado?
Yes — bank statement loans are available for primary residences, second homes, and investment properties.
Does my business need to be profitable to qualify?
For bank statement loans, the focus is on deposit history, not profitability. For conventional full-doc loans, 2-year average net income must support the payment.
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