Can I Buy a Home in Washington If I’m Self-Employed? What Lenders Actually Look At

Yes, You Can Buy a Home in Washington If You’re Self-Employed — But It Works Differently

If you’re self-employed and thinking about buying a home in Washington, you’ve probably heard at least one of these:

• “You need two perfect years of income.”

• “Lenders don’t like business owners.”

• “You’ll never qualify unless you make way more.”

None of those are fully true — but the process is different.

I work with a lot of Washington buyers who are:

• Business owners

• Contractors

• Freelancers

• Commission-based professionals

• 1099 earners

And the buyers who succeed are the ones who understand the rules before they start shopping.

Let’s walk through how this actually works in Washington.

1. What Counts as “Self-Employed” to a WA Lender

From a lending perspective, you’re considered self-employed if:

• You own 25% or more of a business

• You receive 1099 income

• You’re paid primarily through commissions

• You operate as an LLC, S-Corp, C-Corp, or sole proprietor

Even if you pay yourself a W-2 from your own company, lenders still treat you as self-employed.

That classification determines how your income is reviewed.

2. The Big Rule: Two Years Matters — But It’s Not Absolute

Most Washington lenders want to see:

• Two years of self-employment history

• Consistency or growth over time

However, there are exceptions:

• Same line of work before becoming self-employed

• Strong year-over-year income

• Solid reserves and credit

• Minimal business write-offs (more on that next)

This is why lender choice matters so much for self-employed buyers.

Helpful read if you’re still choosing a lender:
How to Choose a Lender in Washington: Questions to Ask + Red Flags to Watch For
 

3. The Truth About Write-Offs (This Trips Buyers Up)

Here’s the part no one explains clearly:

👉 Lenders use net income, not gross revenue.

That means:

• Business deductions lower your qualifying income

• Aggressive write-offs can hurt buying power

• “Making less on paper” matters in lending

Example:

• Gross income: $150,000

• Net income after write-offs: $75,000

The lender uses the $75,000, not the $150,000.

This doesn’t mean you did anything wrong — it just means planning matters.

4. Documents You’ll Need as a Self-Employed Buyer in WA

Expect lenders to request:

• Last 2 years of personal tax returns

• Last 2 years of business tax returns

• Year-to-date profit & loss statement

• Business license (if applicable)

• CPA letter (sometimes)

• Bank statements

• Explanation letters for income fluctuations

Getting these organized early makes everything smoother once you’re under contract.

5. How WA Lenders Calculate Your Income

Washington lenders typically:

• Average your net income over two years

• Look for stability or upward trends

• Scrutinize large swings carefully

If income declined:

• They’ll want an explanation

• Some lenders may use the lower year

• Others may average — this varies by lender

This is where local lender experience matters.

6. Credit Matters More When You’re Self-Employed

Self-employed buyers are often approved with:

• Higher credit score expectations

• Cleaner recent history

• Lower debt-to-income ratios

Why?
Because income is considered less predictable.

If your credit is strong, it offsets income complexity.

7. Down Payment Expectations for Self-Employed Buyers

Contrary to popular belief:

• You can still buy with low down payment options

• 3%–5% down may be possible

• Terms depend heavily on credit and income stability

If you’re exploring low down payment options, this pairs well with:
Can I Buy a Home in Washington With 3% Down? What That Actually Looks Like
 

8. Common Mistakes Self-Employed WA Buyers Make

These are the ones I see most often:

• Changing business structure mid-process

• Making large equipment purchases before closing

• Depositing cash without documentation

• Switching accountants right before applying

• Waiting until they find a house to talk to a lender

Preparation avoids stress — and missed opportunities.

9. Appraisals & Self-Employed Buyers: What to Know

The appraisal process is the same — but your financing timeline matters more.

If income review takes longer:

• Appraisal timing matters

• Contingencies need to be realistic

• Lender communication is critical

Helpful context here:
Appraisal Contingency + Low Appraisal Options in WA
 

10. Self-Employed Buyers Competing in Washington Markets

Yes — self-employed buyers win homes every day.

What helps:

• Fully reviewed pre-approvals

• Strong lender letters

• Realistic offer structure

• Clean contingencies

Sellers care more about certainty than job titles.

11. Should You Wait to Buy If You’re Self-Employed?

Not necessarily.

You may be ready if:

• Your income is stable

• Your documents are organized

• Your credit is solid

• Your lender is experienced

You may want to prepare longer if:

• You just became self-employed

• Your income is fluctuating significantly

• You need to clean up tax strategy first

Both are smart decisions — timing matters.

12. The Washington Reality for Business Owners

Being self-employed doesn’t disqualify you.

It just means:

• More documentation

• More planning

• The right team matters more

When done correctly, it’s absolutely manageable.

Final Thought

I work with many Washington buyers who run businesses, work for themselves, or earn income differently than a traditional W-2 — and they successfully buy homes every year.

If you’re self-employed and want to understand what your numbers look like before making a move, I’m happy to walk through it with you.

If you’re planning a move in Washington, I’d love to help you create a plan that fits your business, your income, and your long-term goals — without pressure.

 Written by: Lani Fisher — Washington Realtor Helping Everyday Buyers & Sellers With Confidence