Being your own boss has its perks, but when it comes to refinancing your mortgage, self-employment can add a few extra hoops to jump through. The good news? It’s absolutely doable—you just need to know what lenders are looking for and how to present your income clearly.

Whether you're a freelancer, contractor, small business owner, or gig worker, this guide will walk you through what to expect when refinancing your home with self-employed income.

Why Is Refinancing Harder When You're Self-Employed?

It’s not that lenders don’t trust entrepreneurs—it’s that your income may not be as consistent or easy to verify as someone with a W-2 job.

Lenders need to determine whether your income is stable and likely to continue. That means:

1. Looking at net income. (after business expenses)
2. Reviewing multiple years of tax returns.
3. Understanding business structure and fluctuations.

What Type of Loan Are You Looking For?

What You’ll Need to Qualify

Here’s what most lenders will ask for when you're self-employed and applying for a refinance:

1. Two Years of Personal & Business Tax Returns
   
   1. This is standard for self-employed borrowers. If you’ve only been self-employed for one year but were in the same industry before, you may still qualify.
2. Profit & Loss Statement (P&L)
   
   1. Some lenders may request a year-to-date P&L, especially if your most recent tax return doesn’t reflect your current earnings.
3. Bank Statements
   
   1. Bank statements can help back up your P&L and show consistent income deposits.
4. Business License or Incorporation Docs
   1. Proof that your business is active and legitimate.
5. Good Credit & Healthy Debt-to-Income Ratio
   1. Even with fluctuating income, solid credit and low debt can help you qualify more easily.

Tips to Improve Your Chances of Approval

1. Separate business and personal expenses. Lenders want clean documentation.
2. Work with a lender who understands self-employed borrowers. Some lenders offer programs with flexible income documentation.
3. Don’t over-deduct on taxes. Writing off too much can shrink your qualifying income.
4. Plan ahead. Review your last two years of tax returns before applying to spot any issues early.

When Refinancing Makes Sense for the Self-Employed

Even with some extra paperwork, refinancing can be a smart move if:

1. You want to lower your monthly mortgage payment.
2. You’d like to consolidate high-interest debt through a cash-out refinance.
3. You’re planning to invest in or grow your business and need liquidity.

Final Thoughts

Refinancing as a self-employed homeowner may take a little more preparation, but it’s far from impossible. With the right documentation, you can take advantage of your home equity or secure better terms on your mortgage.

Schedule a consultation to speak with a loan officer or start the process online today.