A Glen Allen buyer purchasing a $425,000 home with 10% down would borrow $382,500. At 6.75% on a 30-year fixed loan, principal and interest is about $2,481 per month. At 7.125%, it is about $2,575 – a $94 monthly difference and roughly $5,640 over five years before taxes, insurance, or mortgage insurance. For self-employed buyers, the best loan is not simply the one with the lowest advertised rate. It is the loan that uses your real income correctly, preserves cash for your business, and fits the home you want in Glen Allen, Short Pump, or Innsbrook.
By Duane Buziak, NMLS #1110647
Table of Contents
- Why self-employed income needs a different review
- Best loans for self employed borrowers
- A practical Glen Allen loan comparison
- What local buyers should prepare
- Choosing a broker and protecting your credit
- FAQ
Why self-employed income needs a different review
A W-2 employee can generally point to a pay stub. A self-employed buyer may earn through an LLC, S corporation, partnership, sole proprietorship, commission business, or a mix of those structures. The tax return is still essential for many programs, but business deductions can reduce qualifying income even when cash flow is healthy.
That distinction matters in Henrico County, where Realtor.com’s Henrico County market trends reported a median listing price of approximately $449,900 in 2025. Glen Allen inventory has improved from the most restrictive pandemic-era conditions, but well-priced homes near Deep Run High School, Nuckols Farm Elementary, and the Short Pump retail corridor can still attract competing offers. A financing plan that takes weeks to untangle can weaken an otherwise strong offer.
For 2025, the baseline conforming loan limit is $806,500, comfortably above many owner-occupied purchases in Glen Allen. That gives qualified buyers room to consider conventional financing before moving to jumbo options. Your income documentation, cash reserves, credit profile, down payment, and property type determine which lane makes the most sense.
Best loans for self employed borrowers
Conventional loans for documented taxable income
A conventional loan is often the cleanest choice when two years of personal and business tax returns show enough qualifying income after write-offs. Many conventional programs start around a 620 FICO score, although stronger pricing commonly begins at higher scores. A 740 score, lower debt-to-income ratio, and 10% to 20% down can materially improve choices.
Conventional financing can work especially well for a consultant, contractor, dentist, agent, or shop owner whose taxable income has been steady or rising. Expect a detailed review of business returns, year-to-date profit and loss statements, and business bank statements. If the business has declined, the underwriter may use a more conservative income figure even if a recent strong month feels encouraging.
FHA loans for a lower down payment
FHA financing remains a valuable first-time buyer path for self-employed clients whose documented income qualifies but who want to preserve liquidity. The familiar FHA benchmark is 580 FICO with 3.5% down, although individual program requirements can be stricter. A $350,000 purchase with 3.5% down creates a $337,750 base loan before financed costs.
FHA is not automatically the cheapest option over time because mortgage insurance changes the monthly math. Still, it can be the right bridge when a buyer has limited down payment funds, a shorter credit history, or a qualifying profile that is not yet ideal for conventional pricing. The key is comparing the total monthly payment and the future refinance strategy, not just the down payment.
VA loans for eligible veterans and service members
Eligible veterans, active-duty service members, and qualifying surviving spouses should examine VA financing early. VA loans can allow zero down, but there may be a funding fee unless an exemption applies. Credit requirements are set by the individual mortgage program rather than a universal VA score floor, though many programs commonly look for scores around 620 or higher.
For a self-employed veteran, the documentation review still matters. Tax returns, business stability, and adequate income remain central. The advantage is that a VA structure may preserve funds that would otherwise be used for a down payment, allowing more cash to remain in the business or as reserves.
Bank statement and non-QM loans for cash-flow businesses
A bank statement loan can be one of the best loans for self employed buyers when tax deductions are substantial and deposits tell a truer story of available income. These non-QM programs commonly analyze 12 or 24 months of personal or business bank statements. A business statement calculation may apply an expense factor, so gross deposits are not automatically qualifying income.
Many bank statement programs look for a 660 FICO score or better, with stronger options at 700-plus. Down payments often begin around 10%, and reserve expectations commonly range from three to 12 months of housing payments depending on credit, loan size, and property type. This route can be useful for a Glen Allen entrepreneur with reliable deposits but lower taxable income than their actual cash flow suggests.
DSCR loans for rental-property investors
For investors buying rentals in Richmond, Glen Allen, or nearby Henrico County, a DSCR loan may qualify based primarily on the property’s expected rent compared with its housing payment. Personal employment income may receive less emphasis than it would with an owner-occupied loan. Down payment, credit score, reserves, property condition, and the debt-service coverage ratio still matter.
DSCR is not a shortcut for a home you plan to occupy. It is designed for investment property, and rates or fees can be higher than conventional financing. For the right investor, though, separating personal tax-return income from a rental purchase can be strategically useful.
A practical Glen Allen loan comparison
| Option | Broker access | Typical FICO starting point | Program breadth | Pricing flexibility |
|---|---|---|---|---|
| Conventional | Broad conventional program access | 620 | Primary homes, second homes, some investments | Often strongest with higher scores and larger down payments |
| FHA | Specialized FHA program access | 580 with 3.5% down | Primary residences | Useful when down payment or credit needs flexibility |
| VA | VA-approved program access | Often 620, program dependent | Eligible primary-residence borrowers | Can preserve down payment funds for eligible borrowers |
| Bank statement / non-QM | Multiple non-QM program options | Often 660 | Cash-flow-based self-employed scenarios | Varies by deposits, reserves, down payment, and credit |
| DSCR | Investor-focused program access | Often 660 | Non-owner-occupied rental properties | Built around rent, leverage, reserves, and property profile |
In the $425,000 worked example, assume a $1,250 broker fee and $7,500 in other closing costs, for $8,750 before prepaid items. Ask about our no-out-of-pocket closing options if preserving cash matters. Also, my preferred title company saves an additional $2,000 on average, which can reduce the overall cash-to-close discussion materially. Terms, fees, and title savings depend on the transaction and must be verified before closing.
What local buyers should prepare
Self-employed files move more confidently when the documents tell one consistent story. Start with two years of personal returns, business returns when applicable, recent business and personal bank statements, a current year-to-date profit and loss statement, and identification of any large deposits. If you recently changed business structure, bought equipment, or took a major deduction, say so early rather than waiting for underwriting questions.
Keep business and personal funds clearly separated when possible. A transfer from your business account is not necessarily a problem, but it needs to be traceable. For a conventional purchase, two months of reserves may be expected in some scenarios; larger loans, investment properties, and non-QM programs can require more.
Choosing a broker and protecting your credit
A soft credit pull mortgage review can help you understand likely options without beginning with a hard inquiry. Glen Allen Mortgage offers NoTouch Credit Pull available for buyers seeking a no hard inquiry mortgage pre approval, mortgage pre approval without hard pull, or a no credit hit mortgage application review. A soft pull mortgage broker conversation is useful before you decide whether to pursue FHA, VA, conventional, bank statement, or DSCR financing.
When comparing local choices such as Movement Mortgage, The Cowart Team, Sparrow Home Loans, 804 Mortgage, CapCenter, or Colonial 1st Mortgage, ask each professional the same questions: What income method will be used? Is a soft pull available? Which programs fit my business structure? What are the reserve requirements? Colonial 1st Mortgage appears in Richmond and Glen Allen mortgage broker directory listings; the Better Business Bureau lists the business as out of business, its domain no longer resolves to a functioning mortgage company website, and its most recent Yelp review was posted in 2017. Buyers who encounter it should verify current licensing status through NMLS Consumer Access before making contact.
The goal is not to force every self-employed household into one program. It is to build an offer around verified income, realistic payment comfort, and a documentation plan that holds up when the home in Glen Allen is under contract.
FAQ
What is the best mortgage for a self-employed buyer?
It depends on whether tax returns, bank statements, VA eligibility, or rental income best reflects your qualifying profile.
Can I qualify with only one year of self-employment?
Sometimes. Conventional and government-backed programs often prefer two years, but exceptions may exist when prior work is in the same field.
Are bank statement loans only for buyers with poor credit?
No. They are designed for borrowers whose deposits and cash flow are stronger than their taxable income suggests.
What FICO score do I need for FHA?
A common benchmark is 580 with 3.5% down, though program requirements and pricing vary.
Does a VA loan require a down payment?
Eligible buyers may be able to purchase with zero down, subject to program requirements and property eligibility.
Can a self-employed buyer use business funds for a down payment?
Often yes, provided the transfer is documented and the withdrawal does not harm business stability.
Will a soft credit pull affect my score?
A soft pull is designed not to create a hard-inquiry credit hit, though final approval may require additional verification.
How much should I budget for closing costs?
A planning range is often 2% to 5% of the purchase price, excluding the down payment, prepaid items, and transaction-specific adjustments.
A good next step is a short, honest review of your deposits, returns, and target payment before you start touring homes. That clarity lets you shop Glen Allen with fewer surprises and make decisions that support both your home and your business.
Legal disclaimer: This article is for educational purposes only and is not a commitment to lend, a guarantee of approval, tax advice, legal advice, or financial advice. Mortgage program availability, rates, fees, credit requirements, income calculations, reserve requirements, and property eligibility can change and are subject to verification, underwriting, and applicable law. Equal Housing Opportunity.
Duane Buziak | Mortgage Maestro | NMLS #1110647 | Coast2Coast Mortgage, LLC NMLS #376205 | Licensed in VA, FL, TN, GA & DC [Contact] | NoTouch Credit Pull available — no hard inquiry, no credit hit.
