Being self-employed shouldn’t put your dream of owning a home in San Marcos on hold.If your income comes from clients, gigs, or running your own business, you might be wondering how to qualify for a mortgage without the standard W-2 paperwork. The truth? Plenty of self-employed buyers, including graphic designers, estheticians, landscapers, and online sellers, are closing on homes every month in San Marcos.

You just need a lender who knows how to work with your kind of income.

In this guide, we’ll show you how to navigate the homebuying process without tax returns or W-2s and why San Marcos is one of the best places in Texas to do it.

Here’s how.

Why W-2s Aren’t the Only Way to Qualify

When most lenders talk about "income verification," they’re usually referring to W-2s, pay stubs, and tax returns. But if you’re self-employed, your income probably doesn’t show up in a neat, salaried package. And your tax returns might not reflect your full earning power, thanks to write-offs and deductions.

That’s where alternative documentation mortgage programs come in.

These programs are designed specifically for self-employed borrowers in Texas, allowing you to prove your ability to repay a loan using other methods—like bank statements, 1099s, or even your business’s profit and loss statements.

Loan Options for Self-Employed Buyers Without a W-2

Here are four mortgage options commonly used by self-employed home buyers in San Marcos and across Central Texas:

1. Bank Statement Loans

Instead of tax returns, you submit 12 to 24 months of personal or business bank statements to show consistent income. These are ideal for business owners, freelancers, and gig workers who manage their cash flow through regular deposits.

2. 1099-Only Loans

If you’re a contractor who receives regular 1099s from clients, this program allows you to qualify based on your gross income over the past 1–2 years. It’s perfect for ride-share drivers, real estate agents, or consultants.

3. Profit & Loss (P&L)-Only Loans

Some lenders will allow you to submit a year-to-date P&L statement, sometimes accompanied by a CPA letter, instead of traditional income docs. This works well for small business owners who keep organized financial records.

4. Asset-Based Loans

If you’ve built up savings, retirement accounts, or investment portfolios, you may qualify based on the value of your assets, even without traditional income verification. This is common for early retirees or seasonal workers with large cash reserves.

Why San Marcos is a Great Place for the Self-Employed to Buy a Home

San Marcos offers something rare: a Central Texas lifestyle that’s creative, connected, and still affordable. For self-employed professionals, it hits the sweet spot between opportunity and livability:

A Thriving Creative and Entrepreneurial Community

Home to Texas State University and a growing base of independent business owners, San Marcos attracts everyone from artists and musicians to digital nomads and boutique shop owners. If you’re a freelancer, consultant, or small business founder, you’re in good company.

Ideal Location for Flexible Living

Centrally located between Austin and San Antonio, San Marcos makes it easy to work in one city and live in another or run a remote business with access to both. Many self-employed buyers choose San Marcos for its balance of access and breathing room.

Still-Affordable Real Estate (For Now)

Compared to the skyrocketing prices in Austin, San Marcos still offers homes at price points that make sense for first-time buyers, gig workers, and self-employed families. However, demand is growing rapidly, so locking in your pre-approval now can help you move quickly when the right home becomes available.

Quality of Life with Room to Grow

With river access, green spaces, local coffee shops, and a walkable downtown, San Marcos supports the kind of lifestyle many self-employed folks value: creative, balanced, and community-driven.

What Not to Do if You’re Self-Employed

Even though you don’t have a W-2, there are still a few key things to avoid when preparing for a mortgage:

●     Don’t commingle personal and business finances. Keep separate accounts; it makes your income easier to verify.

●     Don’t assume you’ll be denied. Many buyers rule themselves out before even talking to a lender.

●     Don’t use a big bank that doesn’t understand your income. Traditional banks often lack the flexibility and loan options that self-employed buyers need.

What to Do Instead

Instead of trying to "fit the mold," here’s what we recommend:

1.    Work with a lender that specializes in self-employed loans.

At New Horizons Lending, we regularly help San Marcos-based entrepreneurs, creatives, and contractors get approved without W-2s or full tax returns.

2.    Get your paperwork in order.

Start gathering bank statements, 1099s, invoices, and a current P&L if you have one. Even if you're not buying for a few months, this helps speed things up.

3.    Be honest about your income and goals.

We’ll help you understand what you qualify for now and what steps you can take to increase your purchasing power.

Let’s Get You Pre-Approved in San Marcos

If you’re self-employed and looking to buy in San Marcos, you deserve a lender who understands the full picture of how you earn and how you live.

At New Horizons Lending, we’re local, flexible, and here to make the process easier. We’ll match you with a mortgage program that works with your income, not against it. Ready to buy without the W-2? Schedule a free call with our team today and start your pre-approval process with confidence.