Stated Income Loans: These loans allow self-employed borrowers to state their income without needing to provide traditional documentation like tax returns. While lenders may still verify the borrower’s income in other ways (such as bank statements or profit and loss statements), this option offers more flexibility for those with variable or non-traditional income.

Bank Statement Loans: Instead of relying on tax returns, these loans use bank statements to verify income. Lenders will look at deposits over a period (typically 12-24 months) to determine the borrower’s income level. This option is ideal for self-employed individuals with fluctuating incomes or those who write off significant expenses on their taxes.

Co-Signer or Guarantor Loans: If a self-employed individual has difficulty qualifying for a mortgage on their own, they may consider having a co-signer or guarantor—someone with a steady income or higher credit score—help back the loan. This can improve the chances of mortgage approval, as the co-signer’s financial standing will be taken into account.

No-Doc Loans: These loans are designed for individuals who don’t have the traditional documentation needed for a standard mortgage, such as tax returns or pay stubs. Instead, the loan is based on the value of the property being purchased and the borrower’s creditworthiness. These types of loans are becoming less common but may still be available through some lenders.

1. Alternative Documentation Loans: For self-employed individuals, alternative documentation loans allow them to use other types of records to prove income, such as business financial statements, a letter from an accountant, or a profit-and-loss statement. This option is more flexible than traditional loans but may come with higher interest rates due to the perceived risk.