A roofing contractor in Briargate brought in $310,000 last year. His CPA did a great job. Truck, tools, mileage, a home office, depreciation on the trailer, health insurance, half his self-employment tax. Taxable income on the return: $61,000. He saved about $20,000 in taxes. Then he went to buy a house in Wolf Ranch and the bank said he could afford $280,000. Here is why, and what fixes it.
The Bank Does Not See What You Made. It Sees What You Kept.
A regular mortgage is priced off your tax return. Not your revenue. Not your bank balance. The bottom line on Schedule C, or the K-1 and the business return if you are an S corp. Every dollar your CPA moved off that line to save you tax also came off the income a lender can count.
Some of it comes back. Depreciation gets added back. Depletion and amortization get added back. A one-time loss the lender can prove will not repeat gets added back. But the truck, the mileage, the phone, the meals, the supplies, and the home office do not. Those were real money out the door as far as the bank is concerned. We walk through the math on how lenders calculate self-employed income.
The Math on the Roofer
Here is what his file looked like on a standard loan. Two-year average, because that is how the rule works:
- Gross receipts: $310,000 last year, $265,000 the year before.
- Net profit on Schedule C: $61,000 and $54,000.
- Depreciation added back: $9,000 and $8,000.
- Two-year average qualifying income: about $5,500 a month.
At $5,500 a month, with a $700 truck payment and $300 in cards, a 45% debt ratio leaves about $1,475 for a house payment. In El Paso County in 2026, with taxes and insurance, that buys a home somewhere near $220,000 to $280,000 depending on the rate and the down payment. He was shopping at $650,000.
What Fixes It: Count the Deposits, Not the Return
A bank statement loan does not use the tax return. It uses 12 or 24 months of your bank statements. The deposits are the income. The write-offs never enter the picture because the return is never asked for.
On his business account, the last 12 months of deposits totaled $298,000 after we pulled out a transfer from savings and an insurance check. His CPA gave us a one-line letter that said his business runs at about 45% expenses, which is normal for roofing. So the lender counted 55% of the deposits as income. That is $163,900 a year, or about $13,650 a month.
Same man. Same business. Same year. One paper says $5,500 a month. The other says $13,650. At $13,650 a month he qualified for the Wolf Ranch house with room to spare.
How the Bank Statement Path Works Here
- 12 or 24 months of statements. Personal or business. Twenty-four usually gives the better number if the business is growing.
- Business statements get an expense factor. A fixed 50% with no extra paperwork. Or a lower number your CPA states in writing, like the roofer’s 45%. Or 20% for a solo service business with almost no overhead. You must own at least 25% of the business.
- Personal statements get no expense factor. If you pay yourself into a personal account, 100% of those deposits count.
- Credit from 660. 10% down with strong credit. Reserves are checked.
- No tax returns. Not one page. Not a transcript.
The full local rules are on the Colorado Springs bank statement loan page. If you are a 1099 contractor instead of a business owner, the 1099 loan does the same thing with your 1099s, and 100% of the gross counts.
What are you looking to do?
No SSN required. No credit pull. Takes about 2 minutes.
Before You File Next Year
If you plan to buy in the next 24 months, have this talk with your CPA before you file, not after:
- Ask what your net will look like. If it lands under what you need to qualify on a standard loan, you already know the answer is a bank statement loan. Plan for it. Do not stop taking the write-offs.
- Keep business and personal money apart. One business account. All revenue lands there. Pay yourself from it. Mixed accounts are the number one thing that shrinks a bank statement file.
- Stop moving money around. Transfers between your own accounts are not income and get pulled out. Every transfer is a question the underwriter has to ask.
- Do not take a big one-time deposit right before you apply. An equipment sale, a loan, a gift. It gets pulled out and it makes the rest of the file look odd.
- File on time. Even on a bank statement loan, an unfiled year or an extension can raise questions.
Who This Fits in Colorado Springs
Anyone who runs a real business and files a real return. Contractors and trades. Realtors with a big commission year and a lot of write-offs. Salon and gym owners. Food trucks. Consultants who left a job at one of the bases. The people who keep the most money are the ones a tax return hurts the most. Read the Colorado Springs self-employed mortgage hub to see which path fits how you get paid.
The Trade-Off
A bank statement loan costs more in rate than a standard loan. The roofer paid for the write-offs one way or the other. He chose to pay a little more on the mortgage and keep the $20,000 in tax savings, and he bought the house he wanted. After two clean tax years he can refinance into a standard loan if the numbers work. That is a trade most owners take once they see it laid out in dollars.
Sources: PRMG Non-QM Income Qualifying Product Profile (06/04/2026 and 8-20-2026): bank statement documentation, expense factor treatment on business and personal statements, 1099 income at 100% of gross, 660 bank statement credit floor. Fannie Mae Selling Guide B3-3.2 and Form 1084 (self-employed income analysis, depreciation and depletion add-backs). Figures in the example are illustrative and built from published guideline math, not from a client file.
Frequently Asked Questions
Why did my write-offs lower how much house I can afford?
A standard mortgage counts the net income on your tax return, not your revenue. Every deduction lowers that net. Only a few items, like depreciation, get added back.
Should I stop taking write-offs so I can qualify?
Usually no. A bank statement loan qualifies you on your deposits, so you keep the tax savings. Talk to us before you file so you know which path you are on.
What is added back to self-employed income on a regular loan?
Depreciation, depletion, amortization, and a one-time loss the lender can prove will not repeat. Mileage, meals, supplies, the home office, and most other expenses are not added back.
How does a bank statement loan count my income?
It uses 12 or 24 months of deposits. Business statements get an expense factor: a fixed 50%, a lower number your CPA states in writing, or 20% for a solo service business. Personal statements count at 100%.
What credit score do I need for a bank statement loan in Colorado Springs?
660. That is the floor on the bank statement path. 1099 loans start at 620.
Can a realtor with big write-offs use a bank statement loan?
Yes. Commission deposits into a business or personal account work the same way. A 1099 loan is also an option, and 100% of the gross 1099 counts with no expense factor.
Do I need my CPA involved?
Only if you want a lower expense factor than the fixed 50% on business statements. Then a short CPA letter states the factor. Files that use the fixed 50%, or personal statements, skip the letter.
Can I refinance to a regular loan later?
Yes. Once you have two years of tax returns that support the payment, a refinance into a standard loan is an option. Whether it makes sense depends on rates at the time.