How Long Do I Need to Be Self-Employed to Get a Mortgage?

By Travis Jost, Mortgage Loan Originator — NMLS #2191646, Heathrow Mortgage NMLS #1849599 · October 15, 2026

For most standard loans, plan on two years of self-employment. Fannie Mae generally wants a two-year history, but it can use income from a business you have run for less than two years if your latest tax returns show a full 12 months from that business and you earned the same or more doing similar work before. FHA can count income after one to two years if you worked in the same line of work for at least two years before. If you own 25% or more of a business, both treat you as self-employed. Non-QM lenders set their own rules.

Many people in Nashville and Franklin leave a W-2 job to go out on their own and then want to buy a home. Timing matters. Lenders want proof the income will keep coming, and tax returns are how standard loans see it.

The rules side by side

	Fannie Mae (conventional)	FHA
Who counts as self-employed	25% or more ownership in a business	25% or more ownership in a business
Standard history	Two years	Two years
Shorter history	Less than two years can work if the latest returns show a full 12 months from the current business, plus prior income at the same or higher level in similar work	One to two years can work if you worked in the same or a related line of work for at least two years before
Tax returns usually needed	Two years; one year may work if the business has existed 5 years and you have owned 25%+ for 5 years in a row	Two years of returns is the standard

What this means for timing

Thinking about leaving your W-2 job? If you can, talk to a lender first. Buying before you switch is often simpler.
Already switched? The first full year on your tax return matters most for standard loans.
Write-offs count. Standard loans use your net income after expenses, not your gross sales.
Not there yet? Some non-QM lenders, such as bank statement loan programs, use other ways to show income. Terms vary by lender.

Common questions

Can I get a mortgage after one year of self-employment?

Sometimes. Fannie Mae and FHA can count it if you did the same or similar work before. Your latest tax return usually needs to show a full year from the business.

Am I self-employed if I own part of a business?

Fannie Mae and FHA treat you as self-employed if you own 25% or more of the business.

Do lenders use my gross income or net income?

Standard loans use your net income from your tax returns, after business expenses.

When is one year of tax returns enough for Fannie Mae?

When the business has existed for five years and you have owned 25% or more of it for five years in a row, plus other conditions.

I am a 1099 contractor. Am I self-employed?

Often, yes. Many lenders treat 1099 income like self-employment income. Ask your lender how they will count yours.

What if I can't wait two years?

Some non-QM loans use bank statements or other proof of income. They usually cost more, and terms vary by lender.

Talk it through

Just went out on your own, or planning to? Call me at (615) 495-6594, email travis@heathrowmtg.com, or start an application.

Sources

Fannie Mae Selling Guide B3-3.2-01: Underwriting Factors and Documentation for a Self-Employed Borrower — 25% ownership test; two-year history generally required; less than two years allowed with a full 12 months on the latest returns and prior similar income; one year of returns allowed for a business in existence five years with 25%+ ownership for five consecutive years.
HUD Handbook 4000.1 (Update 18, Aug. 12, 2026): Self-Employment Income — 25% ownership; at least two years; one to two years allowed with two years of prior work in the same or a related line of work.

Checked October 15, 2026. Lenders may add their own rules on top of these. This page is general information, not a loan offer.