You got out of the Army 16 months ago. You started an HVAC company. It is doing better than your last two years of pay combined. And the bank on Academy Boulevard just told you to come back when you have two years of tax returns. That answer is wrong. Not rude. Just wrong. Here is the real rule and how we run a file like yours in Colorado Springs.
The Rule Most Lenders Quote Is Half a Rule
The full rule reads like this. Two years of self-employment is the standard. Less than two years can still be used if you can show at least two years of work in the same line of work, or a related job, before you went out on your own. Less than one year cannot be used. That last line is the only true wall.
So the question is not how old your business is. The question is how long you have been doing this kind of work. A soldier who ran a motor pool for six years and now runs a diesel repair shop has eight years in the trade, not sixteen months. We cover the full rule on the newly self-employed mortgage guide. This post is about how it plays out here.
Why This Comes Up So Often in Colorado Springs
This is a town where people change how they get paid all the time. Not what they do. How they get paid.
- Separation and retirement. Fort Carson, Peterson, Schriever, and the Academy send thousands of people into civilian life every year. A lot of them start a business doing what they did in uniform. Logistics. IT. Security. Mechanics. Medical.
- Defense contractors who go 1099. Same badge, same building, same desk. The W-2 became a 1099 when the contract changed hands.
- Military spouses. A spouse who ran a salon, a bookkeeping practice, or a photography business at three prior duty stations. The Colorado LLC is 10 months old. The career is 10 years old.
- Trades. Licensed plumbers and electricians who left a big outfit to pull their own permits.
Every one of those files has the same shape. Long history in the work. Short history on the new tax ID. That is the exact case the exception was written for.
What We Use to Build the Bridge
The exception only works if the two years of prior work are on paper. Here is what carries a Colorado Springs file:
- W-2s from the prior job. Two years is enough. If the job was with a contractor at Peterson or Schriever, the W-2 shows the employer, not the base. That is fine.
- Your DD-214 and ERB or ORB. If the prior work was military, the discharge paper and your service record show your MOS or AFSC and how long you held it. A 91B who opens an auto shop has the bridge on one page.
- A one-page work timeline. Dates, employer, title, what you did. Written by you, checked by us. It ties the old job to the new business in plain words.
- Licenses. A Pikes Peak Regional Building Department contractor license, a state trade license, or a professional license. These show the work is the same work.
Then We Prove the Business Exists
Every program we use for these files requires an outside check that the business is real. It has to happen within 10 business days of closing. In Colorado Springs that check is easy if you set it up early:
- Colorado Secretary of State. Your LLC or corporation should show as in good standing on the state business search. If you never filed an annual report, fix that now. It takes ten minutes.
- City of Colorado Springs sales tax license. If you sell goods or taxable services inside city limits, you should have one. Lenders like it because the city checked you first.
- A CPA letter. If you have a CPA, a short letter that says how long they have handled your books and what the business does.
- El Paso County. A trade name filing or a county business license if your work needs one.
Pick the Income Document That Fits the Months You Have
Once the bridge is built, the last question is which paper shows your income best. You have four choices. The same 16 months can produce three different qualifying incomes.
- One year of tax returns. Full documentation with one year of personal and business returns. Best if your first-year return is clean and you did not write off much.
- 12 months of bank statements. No tax returns at all. Deposits are the income. Credit from 660. This is the most common path for a new owner who took every write-off. See bank statement loans in Colorado Springs.
- One year of 1099s. For the contractor who went 1099. 100% of the gross counts. No expense factor. Credit from 620. See 1099 loans in Colorado Springs.
- A 12-month CPA profit and loss. Credit from 660 with two months of bank statements to back it up, or 720 without. See P&L loans in Colorado Springs.
What are you looking to do?
No SSN required. No credit pull. Takes about 2 minutes.
A Colorado Springs Example
Say you separated from Fort Carson in May 2025 after six years as a 12B combat engineer. You started an excavation and grading company that June. You have 15 months of business now. Your last two years of LES statements and your DD-214 show six years of heavy equipment and earthwork. That is the bridge. Your LLC is in good standing with the state. That is the verification. Your business account shows $22,000 a month in deposits on average. That is the income, on a 12-month bank statement loan, with no tax returns needed.
The bank said two years. The guideline said 15 months plus six years. The guideline wins.
The Only Real Wall
Under 12 months of self-employment cannot be used. No exception. If you are at month 9, the right move is a plan, not an application. Keep every deposit in one business account. File your Colorado annual report. Pull your license. Then call us the week you cross 12 months, because by then the file is already built.
What This Costs You
An under-two-years file documents more, not less. Rates on bank statement and 1099 loans run higher than a standard agency loan. That is the price of buying a year early. Compare it to another year of Colorado Springs rent while prices move without you. And once you have two years of returns, a refinance into a standard loan is on the table.
Sources: PRMG Non-QM Income Qualifying Product Profile (06/04/2026 and 8-20-2026): self-employment history, business verification within 10 business days of closing, bank statement, 1099, and P&L documentation. Fannie Mae Selling Guide B3-3.2-01 (length of self-employment). Colorado Secretary of State business database. J.D. Peck, 25+ years originating in Colorado Springs.
Frequently Asked Questions
Can I get a mortgage in Colorado Springs with less than two years self-employed?
Yes, in most cases. Under two years of self-employment can be used when you can show at least two years of work in the same line of work or a related job before you started the business. Under one year cannot be used.
Does my military job count toward the two years of work history?
Yes. Your DD-214 and service record show your MOS or AFSC and how long you held it. A soldier who did the same kind of work in uniform has that history on paper.
I was a defense contractor on a W-2 and now I am 1099 doing the same job. Do I have to wait?
No. The work did not change. Only the tax form did. Your prior W-2s are the two-year bridge. One year of 1099s can be enough to qualify.
My spouse’s business moved here with our PCS. Does the time before the move count?
Yes, as long as it is the same business doing the same work. The move is explained in a short letter. The years before it count.
How does the lender verify my business in Colorado Springs?
Through an outside source within 10 business days of closing. The Colorado Secretary of State business search, a City of Colorado Springs sales tax license, a Pikes Peak Regional Building Department license, or a CPA letter all work.
Do I need two years of tax returns?
No. One year of returns can be used. Or you can skip returns and qualify on 12 months of bank statements, one year of 1099s, or a 12-month CPA profit and loss statement.
What credit score do I need?
620 on a 1099 loan. 660 on a bank statement loan. 660 on a P&L loan with two months of bank statements, or 720 without them.
What if I have been self-employed for less than one year?
Under one year cannot be used. There is no exception. Keep clean deposits in one business account and get your state filings current so the file is ready the month you cross 12 months.