Alternative Income Loan

We offer five main alternative income paths. Bank statement loans use 12 to 24 months of personal or business statements, with deposits serving as qualifying income. 1099 loans qualify independent contractors and gig workers using one or two years of 1099 forms. Profit and loss loans use a CPA-prepared or borrower-prepared P&L statement to document business income. Asset depletion loans qualify borrowers based on liquid assets divided across a loan term rather than monthly income. Written verification of employment (WVOE) loans use a signed letter from an employer in place of pay stubs or W-2s. Most borrowers fit one of these programs based on how their income is structured.

Alternative income loans serve anyone whose income doesn't translate cleanly into a conventional mortgage application. This includes self-employed business owners, real estate investors, freelancers and independent contractors, commission-based earners, gig economy workers, retirees with substantial assets but limited monthly income, and small business owners who minimize taxable income through legitimate deductions. It also serves recently self-employed borrowers who don't yet have two years of tax returns, recipients of large but irregular income like artists or seasonal workers, and borrowers whose income flows through multiple business entities. If a conventional lender has told you that you don't qualify despite strong cash flow, an alternative income loan is likely the answer.

Rates on alternative income loans typically run 0.5% to 2% above conventional 30-year fixed rates, with the exact premium depending on the documentation type, your credit profile, your down payment, and the property type. Bank statement and 1099 loans sit at the lower end of that range, particularly for borrowers with credit scores above 720 and down payments of 20% or more. Asset depletion and P&L loans can sit slightly higher. Investment properties and cash-out refinances carry small additional premiums. The trade-off is straightforward: a slightly higher rate in exchange for qualifying on real income rather than tax-return income, which often makes the difference between buying the property and not.

Yes, and for many self-employed investors this is the most efficient path. Bank statement loans, 1099 loans, and asset depletion loans all work for investment property purchases or refinances. We also offer DSCR (Debt Service Coverage Ratio) loans specifically for investment properties, which qualify based on the property's rental income rather than your personal income at all. For many investors the right answer is a combination: a bank statement or alternative income loan for your primary residence, and DSCR loans for your investment portfolio. Our team can map out the right structure depending on how many properties you own and where you want to grow.

Most programs start at a 620 to 660 minimum credit score and a 10% to 15% minimum down payment, though those minimums shift based on the documentation type and the property. Bank statement loans typically allow the lowest down payments at 10% for primary residences with strong credit. 1099 and P&L programs often start at 15%. Investment properties generally require 20% to 25% down regardless of the documentation type. Borrowers with credit scores above 740, larger down payments of 25% or more, and significant reserves see the best rates and the most flexibility on program selection. Lower credit scores remain qualifying with compensating factors but at less competitive terms.