I’m Michael DiVita — DRE #01372066 | NMLS #241655, DiVita Home Finance (DRE #01818285 | NMLS #323700), Tiburon, CA. I’ve been in California mortgage lending since 2000 and founded DiVita Home Finance in 2007. Self-employed borrowers are my specialty — most of my clients show low taxable income on paper but have the real-world financial strength to qualify for California real estate. Call (800) 239-1103.
It is a paradox familiar to nearly every successful self-employed business owner: you have a thriving business, money in the bank, and a lifestyle that reflects real financial strength — but your tax return shows income low enough to raise eyebrows at a conventional mortgage lender.
The answer is yes, you can absolutely still get a mortgage. You just need to use a lender and a program that looks at the right numbers.
Why Your Tax Return Shows Low Income
You are not doing anything wrong. Reducing taxable income is the goal of tax strategy. The most common reasons self-employed borrowers show low income on paper include business expense deductions (vehicle, home office, equipment, travel, software), depreciation on business property or vehicles, health insurance premiums deducted as self-employed, retirement plan contributions (SEP IRA, Solo 401k), pass-through losses from real estate or other investments, and S-corp salary structuring (paying yourself less to save on self-employment tax).
Each of these is a legitimate tax strategy. But each one reduces the income number a conventional lender will use to qualify you.
Lenders That Do Not Use Your Tax Return
Bank statement lenders, P&L only lenders, and 1099 lenders all qualify your income without looking at your federal tax return. They look at your actual financial footprint instead. Bank statements show what you actually deposited and spent. P&L statements show what your business actually earned and spent. 1099s show what clients and platforms actually paid you. None of these are distorted by tax planning strategies — they reflect economic reality.
Real-World Example
A Bay Area interior designer came to me after being denied by her bank. Her 2024 tax return showed $72,000 in net income after deductions. Her business checking account showed average monthly deposits of $31,000 over the past 12 months — $372,000 annualized. Using a bank statement loan with a 50% expense ratio on business deposits, her qualifying income came to $186,000. She purchased a home in Corte Madera for $1.1 million with 15% down.
Tax return said $72,000. Bank statement program said $186,000 qualifying income.
Next Steps
Pull your last 12 months of business bank statements and call me. I’ll calculate your qualifying income under a bank statement loan and tell you exactly what you can afford — usually within the same day.
Related: Self-employed mortgage guide | Bank statement loans | Tax write-offs and mortgages
Frequently Asked Questions — Low Tax Income Mortgage California
Can I get a mortgage if my tax return shows very little income?
Yes — bank statement loans, P&L loans, and 1099 loans are specifically designed for borrowers whose tax returns understate their actual earnings. These programs look at what you actually deposited into your business accounts (typically 12–24 months of statements) or what a CPA-prepared P&L shows as net income, not the number on line 15 of your 1040. Self-employed borrowers with low AGI due to legitimate deductions qualify for these programs every day. The key is working with a broker who has access to these lenders — most retail banks don’t offer them.
What is a bank statement loan and how does it work for self-employed borrowers?
A bank statement loan uses your personal or business bank statements — typically 12 or 24 months — to calculate qualifying income instead of tax returns. For business accounts, lenders apply an expense ratio (commonly 50% for most industries, lower for service businesses) to your gross deposits to arrive at net qualifying income. For personal accounts, they typically use 100% of deposits. The result is a qualifying income figure that reflects cash flow reality rather than after-deduction taxable income. Rates are typically 0.5–1% higher than conventional loans, and down payments start at 10–15% depending on loan size and credit score.
Do I need 2 years of self-employment history to qualify for a mortgage in California?
Conventional (Fannie/Freddie) loans generally require 2 years of self-employment history — though some lenders will accept 1 year with strong prior W-2 history in the same field. Bank statement and P&L programs are more flexible: some accept 12 months of self-employment history with 12 months of bank statements. 1099-only programs can work for contractors with consistent 1099 income even if they recently transitioned from W-2. If you’re early in your self-employment, I’ll help you identify which program works with your actual timeline rather than turning you away.
Talk to Michael Directly
DiVita Home Finance | Tiburon, CA | In lending since 2000, founded DiVita Home Finance in 2007. Michael DiVita DRE #01372066 | NMLS #241655. Company DRE #01818285 | NMLS #323700.
💬 Text: (310) 849-9124
