Why your tax return and your cash flow tell different stories

Loans that follow agency guidelines, including conventional loans sold to Fannie Mae or Freddie Mac, plus FHA and VA loans, calculate self-employed income from federal tax returns and supporting business records. Fannie Mae treats anyone with a 25% or greater ownership interest in a business as self-employed and generally requires a two year history. The qualifying number is not gross receipts. It comes from business income after expenses, adjusted for items like depreciation, and then divided down to a monthly figure.

That is where the mismatch starts. Every legitimate write-off, whether it is equipment, mileage, a home office, or a depreciation deduction, reduces taxable income. Lower taxable income is useful in April. It is a problem at mortgage time, because income-based underwriting uses the lower number. A business owner with strong deposits and aggressive but perfectly legal deductions can look poor on paper and profitable in the bank.

If your returns already support the loan amount you need, start there. An agency loan or a jumbo loan usually costs less than a non-QM program. If they do not, you have alternatives, and a bank statement loan is one of them.

What a bank statement loan actually is

A bank statement loan is a non-QM mortgage. Instead of calculating income from tax returns, the lender reviews 12 or 24 months of bank statements, identifies eligible deposits, and converts them into qualifying income using its own formula. These loans are not sold to Fannie Mae or Freddie Mac, and they are not FHA or VA loans. Each lender publishes its own guidelines covering how deposits are counted, which expense factor applies, minimum credit scores, maximum loan to value, and reserves. Bank statement programs sit inside the wider group of non-QM mortgage options, which also includes approaches such as asset depletion for borrowers whose strength is in savings rather than income.

The name does not mean the loan is unsupervised. For consumer purpose mortgages, federal law requires the lender to make a reasonable, good faith determination that you are able to repay, and the lender documents income, debts, assets, and the property. A bank statement loan changes which document proves your income. It does not remove credit, asset, appraisal, or property review.

Loan size is one practical advantage. The 2026 conforming loan limit for a one unit property in Palm Beach County is $832,750, according to FHFA, and loan amounts above that are jumbo. Non-QM programs are not bound by the conforming limit, so they can finance amounts above it, depending on the lender and the program.

How lenders turn deposits into qualifying income

Business statements. The most common approach. The lender totals eligible deposits over the statement period, averages them monthly, then applies an expense factor to account for the cost of running the business. A 50% expense factor is a common program default, and some lenders apply a higher factor to industries that typically run thinner margins. If your real expenses are lower than the default, many lenders will accept a letter from your CPA, tax preparer, or bookkeeping service stating your actual expense ratio, which can raise qualifying income substantially.

Here is the math. Average monthly business deposits of $40,000 at a 50% expense factor produce $20,000 a month of qualifying income. The same deposits with documentation supporting a 35% expense ratio produce $26,000 a month. Same money, same statements, a very different loan amount.

Personal statements. Some programs use personal bank statements instead of business statements, typically with a much smaller deduction from deposits, and usually with a requirement that the deposits can be traced to your business or another recurring source. If you pay yourself by moving money from the business account to your personal account, expect to provide both sides.

What gets excluded. Transfers between your own accounts, loan proceeds, tax refunds, one time windfalls, and large deposits with no paper trail. Lenders also care about behavior over time. A steady or growing deposit pattern supports the file. A declining trend invites questions, and returned items or overdrafts need an explanation.

12 months or 24 months of statements?

Both options exist, and the choice changes your numbers. A 24 month program shows two full business cycles, and lenders often reward that with better pricing or a higher loan to value. A 12 month program can be the better path when your business grew recently, or when you started within the past two years and want your strongest months counted instead of being averaged against older, lower ones. Ask for both calculations before you commit to a program, because the answer is not always obvious.

What else the underwriter reviews

• Credit history. Minimum scores differ by program. Publicly posted non-QM program summaries we reviewed in October 2026 commonly list minimum credit scores around 640, with better pricing and higher loan to value options at higher scores. A larger down payment can offset a lower score on some programs.
• Loan to value. Many bank statement programs top out around 80% for a primary residence, with less financing available for lower scores, a 12 month statement option, or an investment property. A few programs stretch higher with strong credit.
• Reserves. Cash left over after closing, usually measured in months of the new housing payment. Bigger loan amounts generally require more reserves.
• Self-employment history. Two years is the norm. Some programs accept 12 months when you were working in the same industry before going out on your own.
• The property. Appraisal, condition, insurance, and Florida specific details can decide the file. Roof age can raise insurability questions early, and a flood zone can change your closing costs. Reviewing both before you make an offer saves time later.

What a bank statement loan costs

Bank statement programs are non-QM loans, and non-QM pricing generally carries a higher rate and higher fees than agency loans. Some programs offer interest only payments, which lowers the monthly payment but does not build equity. Ask for a Loan Estimate so you can compare the payment, the annual percentage rate, and the total cost of credit, and ask what the same loan would cost if you could qualify on tax returns. That comparison is the honest way to decide whether the tradeoff is worth it.

On consumer purpose mortgages, federal rules tightly restrict prepayment penalties. A penalty is permitted only in narrow circumstances, is capped at 2% of the prepaid balance during the first two years and 1% during the third year, and cannot run past three years. Investment property loans made for business purposes are not covered by those same rules, which is one reason prepayment penalties come up more often in investor lending than on a primary residence.

When a bank statement loan is not the best tool

• If your tax returns support the income you need, an agency or jumbo loan usually costs less.
• If the subject property is a rental, a DSCR loan may fit better because it focuses on the rent rather than your personal income.
• If you have significant assets and modest taxable income, an asset depletion approach may work better.
• If your business had one unusually strong year, ask whether a profit and loss statement program or waiting for the next filed return gets you better terms.
• If you are comparing several ways to document business income, it helps to see them side by side before choosing.

What to gather before you apply

• 12 or 24 months of statements for every business and personal account you want counted, including all pages
• Year to date profit and loss statement
• Two years of personal and business tax returns, since most bank statement lenders still collect them
• A letter from your CPA, tax preparer, or bookkeeper if you want a lower expense factor applied
• Business license and entity documents, plus a way to confirm the business is active
• Asset statements for the down payment, closing costs, and reserves
• Purchase contract or refinance details, and the current mortgage statement if refinancing

The more of this you assemble up front, the fewer rounds of conditions later. Small documentation gaps are the most common reason a self-employed file slows down.

How MJS Financial works with self-employed Florida borrowers

Bank statement guidelines are set lender by lender, and the differences decide deals. Two lenders can analyze the same 24 months of statements and reach different qualifying income, different maximum loan to value, or different reserve requirements. One wholesaler’s current grid may be stricter than the last one you saw. Working with a Florida mortgage broker who can run your file through several non-QM lenders answers those questions instead of guessing. MJS Financial is a Boca Raton mortgage brokerage serving borrowers across Palm Beach County and Florida, and you can reach the office at 561-212-0002.

Before you pick a program, it helps to know your alternatives. You can review current mortgage rates, run a payment on the mortgage calculator, and when you are ready, start a pre-approval so we can compare the bank statement route against everything else available to you.

Frequently asked questions

Do I need 12 or 24 months of bank statements?

Both options exist with most lenders. The 24 month option shows two full cycles and often unlocks better terms. The 12 month option is useful when your business grew recently or started within the past two years, because it counts your strongest recent months instead of averaging in older ones. Ask for both calculations.

Can I use personal bank statements instead of business statements?

Some lenders allow it, usually with a much smaller deduction from deposits than a business statement program applies, and usually with a requirement that the deposits can be tied to your business income. If you transfer money from your business account to your personal account, plan on providing both sets of statements.

What credit score do I need for a bank statement loan?

It varies by lender and program. Minimum credit scores in the 600s are common, and higher scores typically open up higher loan to value options and better pricing. On some programs a larger down payment helps offset a lower score.

Is a bank statement loan the same as a stated income or no doc loan?

No. You still document income, debts, and assets, the property is appraised, and the lender must still determine that you can repay the loan. The difference is which document provides the income evidence.

Are bank statement loan rates higher than a regular mortgage?

Generally yes. Bank statement loans are non-QM, and non-QM pricing is typically higher than agency pricing. Ask for a current quote and a Loan Estimate so you can compare your options side by side instead of assuming a specific spread.

Can I refinance into a conventional loan later?

Many borrowers do once their tax returns show enough income, subject to credit, income, property, and program requirements at that time. Timing and eligibility are not guaranteed, and seasoning requirements may apply.

Sources

• CFPB, Ability to repay and qualified mortgages (ATR/QM)
• CFPB final rule, General QM loan definition (price based), 85 FR 86308
• 12 CFR 1026.43, Regulation Z ability to repay and prepayment penalty limits
• FHFA conforming loan limit values, including the 2026 one unit limit of $832,750 for Palm Beach County
• Fannie Mae Selling Guide B3-3.5-01, Underwriting Factors and Documentation for a Self-Employed Borrower

Bank statement program terms vary by lender and change over time. The program details described above, including expense factor defaults and credit score ranges, reflect publicly posted non-QM lender guidelines reviewed in October 2026. They are examples of how these programs are structured, not MJS Financial requirements or approval standards. Guidelines are confirmed at the time of application.

A lender will not fund a purchase without proof that the property is insured, and coverage is normally expected to stay in place after closing. If no carrier will write a policy on the home because of the roof, the loan cannot close, no matter how strong the borrower’s file looks. Buyers, sellers, and agents then spend weeks solving a problem that could have been spotted during the inspection period.

Older homes and older buildings in Boca Raton, Delray Beach, Boynton Beach, and the rest of Palm Beach County are where this shows up most. Roof age, roof condition, remaining useful life, and the paperwork that documents all three are usually the real issue behind the delay.

What Florida Law Says About Roof Age

Florida law limits how far an insurer can go in refusing coverage based only on how old a roof is. The rules are in section 627.7011(5) of the Florida Statutes, and they apply to homeowners’ policies issued or renewed on or after July 1, 2022.

• Roof under 15 years old: An insurer may not refuse to issue or refuse to renew a homeowners policy solely because of the age of the roof.
• Roof 15 years old or older: The insurer must allow the homeowner to have a roof inspection performed by an authorized inspector at the homeowner’s expense before it can require a roof replacement as a condition of issuing or renewing the policy. If that inspection shows the roof has five years or more of useful life remaining, the insurer may not refuse to issue or renew based solely on roof age.
• How roof age is measured: From the last date that 100 percent of the roof surface was built or replaced under the building code in effect at that time, or from the initial date of a partial replacement when later partial replacements together covered 100 percent of the surface.
• Who may perform the inspection: A home inspector licensed under section 468.8314, a certified building code inspector, a licensed general, building, or residential contractor or roofing contractor, a licensed professional engineer, a licensed architect, or another person the insurer recognizes as qualified.

Read the limits of the statute too. The same section says it does not stop an insurer from rejecting or non-renewing an applicant when the structure does not meet the insurer’s underwriting criteria or for other lawful reasons. The law blocks refusals based on age alone. It does not force a carrier to insure a roof that is leaking, damaged, or in poor condition.

What Insurers Ask For in Practice

There is no single statewide roof rule that private carriers follow. Each insurer sets its own underwriting standards, and two companies can reach different conclusions about the same roof.

The clearest public benchmark comes from Citizens Property Insurance Corporation, the state-created insurer of last resort. Its published inspection requirements say:

• A four-point inspection is required for property owner, dwelling, and mobile home applications on properties more than 20 years old. The inspector checks the electrical system, plumbing, heating and cooling system, and roof, and reports the age, type, and condition of each.
• Roofs older than 25 years (soft coverings such as shingle) or 50 years (hard coverings such as tile, slate, clay, concrete, or metal) require documentation showing at least five years of remaining useful life.
• When a roof has less than five years of remaining useful life, the owner must provide proof of a full roof replacement before a policy is written.
• Serious hazards or deficiencies, such as exposed wiring or active leaks, should be repaired before an application is submitted.

Private carriers often use different age triggers or condition standards, and they can be stricter or more flexible than Citizens. That is why the answer to “will this roof be insurable” has to come from the carrier quoting the property, not from a general rule read online.

Three Roof Reports Buyers Hear About

These are different documents with different purposes, and mixing them up causes confusion.

• Four-point inspection: A condition report on four systems (roof, electrical, plumbing, and HVAC) that insurers use to decide whether to write a policy. It is not a full home inspection and not a warranty.
• Roof inspection: A focused roof condition report, sometimes on the insurer’s own form, documenting covering type, age, visible condition, and remaining useful life. For carriers that require proof of remaining life, this is often the document that decides the file.
• Wind mitigation inspection: Documents features that resist wind, such as roof shape, roof-to-wall connections, roof covering, secondary water barrier, and opening protection. It is generally used to calculate premium credits rather than to decide eligibility.

A full home inspection is a separate item, done for the buyer’s benefit, and it is not the same as any of the three above.

How the Roof Shows Up in the Mortgage File

Two separate reviews can be affected.

The insurance review

Before closing, the lender must verify that a valid policy exists and that it meets the loan program’s requirements. For loans sold to Fannie Mae, the current Selling Guide requires property insurance written on a “Special” coverage form or equivalent, including windstorm coverage for named storms. Coverage generally has to be on a replacement cost basis, with one exception: roofs must be insured, but they do not have to be insured on a replacement cost basis. The maximum deductible for required perils is 5 percent of the coverage amount, and where a policy has a separate windstorm deductible, that deductible also may not exceed 5 percent.

That detail matters in Florida. A carrier that agrees to cover an older roof on an actual cash value basis can still satisfy the insurance requirement, which means a roof may not have to be replaced simply to close. It also means a future claim may pay less than expected. Percentage hurricane or windstorm deductibles are common in Florida, and they can produce a much larger out of pocket number than a standard flat deductible.

The appraisal and condition review

An appraiser must report needed repairs and deferred maintenance, and must describe the property’s condition using a rating scale from C1 to C6. A C6 rating means the improvements have damage or deferred maintenance severe enough to affect safety, soundness, or structural integrity. Loans secured by C6 rated properties are not eligible for sale to Fannie Mae until the deficiencies are repaired and the rating is at least C5.

Roof problems are one of the classic reasons a file lands in that territory. A roof with active leaks, missing covering, soft decking, or damage that no longer protects the interior can move a purchase into a “subject to repairs” appraisal, which means the work has to be completed and documented before the loan funds.

Program rules also change. FHA rescinded several older appraisal protocols in Mortgagee Letter 2025-18, and the FHA Single Family Housing Policy Handbook is updated periodically. If you were told that a program “requires” a specific roof life or a mandatory professional roof inspection, ask the lender what that program requires today instead of relying on an older rule of thumb.

What to Check Before You Make an Offer

• Pull the roof permit history from the local building department and confirm whether the roof was fully or partially replaced, and when.
• Ask the seller or listing agent for the current insurance declarations page and any roof or four-point inspection reports already on file.
• Look for active leaks, water stains on ceilings, soft decking, missing or loose tiles or shingles, exposed fasteners, and sagging areas.
• Get your own insurance quote during the inspection period, not after the appraisal is ordered.
• Ask whether any carrier has already declined or non-renewed the property. If the seller has had trouble, that is useful information before you are committed.
• Decide in advance who pays if replacement is required: a seller credit, a price reduction, replacement before closing, or a repair escrow where the lender allows one.
• Review your loan options early. A roof that cannot be insured narrows your financing choices, and the insurance problem does not disappear just because a different loan program is used.

A practical habit is to treat the roof the way Florida buyers already treat flood zone status and flood insurance. Check it before you write the offer, and again during the inspection period, so no one is surprised at the end of the process.

Why Timing Matters More Than Buyers Expect

Insurance is often the last item on a buyer’s list, which is exactly why it becomes the item that delays closing. Roof inspections, four-point reports, carrier review, and any required repairs all take time, and on a purchase contract those tasks compete with the appraisal, title work, association documents, and the loan underwriter.

Start insurance shopping when the contract is signed, not when the lender says you are clear to close. If a roof needs attention, you want that discovery to happen inside the inspection period while you still have room to negotiate.

Frequently Asked Questions

Is a 25 year old shingle roof in Florida automatically uninsurable?

No. Florida law bars an insurer from refusing to issue or renew a policy based solely on roof age when the roof is less than 15 years old, and for roofs 15 years or older it gives the homeowner the right to an inspection. If that inspection shows at least five years of useful life remaining, the insurer may not refuse based solely on age. Carriers can still decline or set conditions based on the roof’s actual condition, because the statute does not override their underwriting standards.

Will I have to replace the roof before closing?

Not always. It depends on the carrier’s rules and the loan program. Some situations are solved with a price reduction, a seller credit, or a completed replacement before closing. Others require a repair or replacement condition to be satisfied before the loan funds. Ask your insurance agent and your lender to put their requirements in writing.

Does the roof have to be insured for replacement cost?

For loans sold to Fannie Mae, roofs must be insured but are not required to be insured on a replacement cost basis. Coverage on the rest of the dwelling is expected to be replacement cost. Individual lenders and loan programs can apply stricter requirements, so confirm the terms with your lender.

Do I need a four point inspection on a newer home?

Citizens requires a four-point inspection for homes more than 20 years old. Private carriers set their own triggers, and many ask for one at some point between 20 and 40 years. Ask the agent quoting your property which threshold applies.

Can a newer roof change my monthly payment?

A newer roof can make a policy easier to write and can improve wind mitigation credits, which may affect the premium and therefore the escrowed monthly payment. Premiums, credits, and escrow figures vary by property, carrier, and coverage choices, so no specific outcome should be assumed until you have a quote in hand.

Bottom Line

The roof is a financing issue in Florida, not just a maintenance item. Florida law gives owners real protection against age-only refusals, and some carriers will insure an older roof when an inspection documents remaining useful life. Condition, documentation, and carrier underwriting still decide the file, and the appraisal has its own standards that apply no matter what the insurance outcome is.

MJS Financial LLC helps Florida buyers and homeowners compare loan options and spot roof and insurance issues before they become closing problems. Start a Boca Raton mortgage pre-approval, run your numbers with the mortgage calculator, or call 561-212-0002 to talk through your situation. Current Boca Raton mortgage rates are available for comparison as well.

Where to Verify This Information

• Florida Statutes, section 627.7011, Homeowners’ policies; offer of replacement cost coverage and law and ordinance coverage, including subsections (5) and (6)
• Citizens Property Insurance Corporation, Inspections
• Fannie Mae Selling Guide B4-1.3-06, Property Condition and Quality of Construction of the Improvements
• Fannie Mae Selling Guide B7-3-02, Property Insurance Requirements for One- to Four-Unit Properties
• HUD Mortgagee Letter 2025-18, Rescission of Outdated and Costly FHA Appraisal Protocols

This article describes generally applicable Florida rules and agency standards. Carrier requirements, lender overlays, and loan program rules vary by property and change over time, so confirm what applies to a specific home before making a decision.

Here is a plain English look at what is actually available to Florida first-time buyers in 2026, what changed this year, and what you should verify before you count on any of it.

The short version

• Florida Housing’s Homebuyer Loan Program pairs a 30 year fixed first mortgage with a second mortgage for down payment and closing costs.
• The main second mortgage options are the FL Assist (up to $10,000, 0%, deferred, not forgivable), the Florida Homeownership Loan Program (FL HLP, $12,500, 3%, with a monthly payment), and the HFA Preferred or HFA Advantage PLUS second mortgage (3%, 4%, or 5% of the loan amount, forgivable over five years).
• The Florida Hometown Heroes program is aimed at specific workforce occupations and offers 5% of the loan amount, from $10,000 up to $35,000.
• Assistance money is only available when it is paired with a Florida Housing first mortgage. It is not offered as stand alone down payment help.
• Income limits and purchase price limits are set county by county, and they change during the year.

How Florida homebuyer assistance really works

Most Florida assistance programs use a two loan structure. You get a normal first mortgage for the home, and a smaller second mortgage that covers part or all of the down payment and closing costs.

Because that second loan is recorded against your home, it has to be dealt with later. Depending on the program, it may be:

• Deferred but not forgivable. No monthly payment while you live there, but the balance is due when you sell, refinance, or stop occupying the home.
• Amortizing. It works like a small second mortgage with a monthly payment.
• Forgivable. A share of the balance is forgiven each year you stay, and the remaining balance disappears at the end of the forgiveness period.

This is why “free down payment money” language oversells these programs. You are getting a real loan with real terms, and the terms matter as much as the amount.

The Florida Housing Homebuyer Loan Program

Florida Housing Finance Corporation is the state agency behind most first-time buyer financing in Florida. Its homebuyer program offers 30 year fixed rate first mortgages through participating lenders, and it can be paired with one of the second mortgage programs described below.

Current requirements listed by Florida Housing include:

• A minimum credit score of 640.
• An approved homebuyer education course completed before closing.
• Income below the limit for the county where you are buying.
• A purchase price below the limit for that county.
• First-time homebuyer status under the IRS definition, which means no ownership and occupancy of a primary residence in the three years before the purchase.
• Working with a lender approved to originate the program.

Eligible first mortgages include FHA, VA, USDA, and conventional loans through the HFA Preferred and HFA Advantage products. Properties can include single family homes, townhomes, two to four unit homes where you occupy one unit, condos in approved projects, and modular or mobile homes built in 1994 or later.

Two details surprise borrowers. First, some Florida Housing programs count the income of all household occupants age 18 and older, even if they are not on the loan. Second, the first-time buyer requirement has exceptions, including a veteran’s exemption and an exemption for purchases in federally designated targeted areas. Palm Beach County has targeted census tracts, so it is worth asking whether the address you are considering falls inside one.

The three main second mortgage options

Florida Assist (FL Assist)

Up to $10,000 on FHA, VA, USDA, and conventional loans. It is a 0% non-amortizing second mortgage with no monthly payment, and it is not forgivable. The balance becomes due when you sell, transfer the deed, pay off the first mortgage, refinance, or stop occupying the home.

Florida Homeownership Loan Program (FL HLP)

$12,500 as a 3% fully amortizing second mortgage over 30 years. It carries a monthly payment, and because it does, that payment may need to be counted in your debt to income ratio. The remaining balance is deferred until you sell, refinance, transfer the deed, or move out.

HFA Preferred and HFA Advantage PLUS

This option provides 3%, 4%, or 5% of the total loan amount as a forgivable second mortgage, forgiven at 20% per year over a five year term. It only works with the conventional HFA Preferred or HFA Advantage first mortgage products, so it is not available with FHA, VA, or USDA financing.

Hometown Heroes in 2026

The Hometown Heroes program is the piece most Florida buyers ask about, and it has the strictest rules. For the 2026 program year, Florida Housing limits eligibility to buyers who work full time for a Florida based employer in one of these groups:

• Health care workers.
• School staff members.
• First responders, public safety employees, and court employees.
• Child care workers.
• Service members of the U.S. military or reserves, the U.S. Coast Guard or its reserves, or the Florida National Guard.
• Veterans employed full time by a Florida based employer.

The assistance is 5% of the first mortgage amount, with a minimum of $10,000 and a maximum of $35,000, delivered as a 0% deferred second mortgage that is not forgivable. The program also advertises a lower first mortgage rate, reduced upfront fees, and no origination or discount points.

Funding is the part to watch. Hometown Heroes is funded in rounds and distributed first come, first served. The 2025 round opened in August 2025 with $50 million and had committed all of it within roughly six months. Florida Housing’s 2026 program materials and its 2026 income and loan limits are dated July 2026, which tells you a new funding year is under way, but the agency does not publish a live balance. Ask a participating lender whether the program is taking reservations before you build it into your plan.

Veterans and service members

If you have VA entitlement, you may not need down payment assistance at all. The VA reports that nearly 90% of VA backed loans are made with no down payment. Florida Housing also exempts qualifying veterans from the first-time homebuyer requirement in its bond program, though the agency requires a DD214 and does not extend that exemption to active duty service members, reservists, or National Guard members. Ask your lender how the two sets of rules interact before you assume you qualify for both.

What about the mortgage credit certificate?

Buyers who have been in the market for a while often ask about the mortgage credit certificate, or MCC, which let eligible buyers claim a share of their mortgage interest as a federal tax credit. Florida Housing no longer offers that program and has not issued a certificate since December 31, 2020. Some city and county housing agencies in Florida may still run their own MCC programs, so it is worth checking with the agency that covers your property. If you already hold an MCC, the credit continues while you own and occupy the home, and the recapture rules on an early sale still apply.

Low down payment loans without assistance

Assistance is not the only path. Some buyers do better with a first mortgage that carries a lower down payment and no second lien:

• VA loans for eligible veterans and service members with remaining entitlement, as noted above.
• FHA loans, which are often a fit for buyers with smaller savings or a thinner credit file. Mortgage insurance costs apply and vary.
• Conventional loans through Florida Housing’s HFA products, which can pair with the PLUS second mortgage.
• USDA loans for properties in eligible rural areas. Eligibility is checked address by address, not by city name, so a suburban address can sit outside the eligible area.

Each has different mortgage insurance, pricing, and property rules. Comparing a second lien against a slightly higher rate on the first loan is a math problem that depends on how long you plan to keep the home.

Your county and city may add programs

Florida’s State Housing Initiatives Partnership program, known as SHIP, sends money to counties and cities for local homebuyer assistance. Palm Beach County and several municipalities inside it operate their own programs, and each sets its own income limits, purchase price caps, and repayment terms. Local programs sometimes reach households that the state programs do not, and they sometimes pause intake when funds run short. Check with the county or city housing office for the specific address you are buying.

Stacking more than one source of assistance is sometimes possible and sometimes not, depending on the lender and the programs involved. Do not assume it, ask.

Mistakes that cost buyers the help

• Calling these programs grants. Most are loans secured by a second mortgage.
• Waiting until after you are under contract to ask about assistance.
• Looking at income for the people on the loan only. Household income rules can pull in other occupants.
• Shopping one bank, getting a no, and concluding nothing is available.
• Ignoring purchase price caps, then falling in love with a home above the limit for the program.
• Skipping homebuyer education until the last week of the file.
• Forgetting that the second mortgage has to be handled when you refinance or sell.

What to do, in order

1. Check the income limit and purchase price limit for your county before you shop.
2. Complete an approved homebuyer education course early, since it is required for the state program.
3. Talk to a lender approved to originate Florida Housing programs, and ask which second mortgage options fit your file.
4. Compare an FHA, VA, USDA, or conventional first mortgage using total cost, not just the rate.
5. Confirm current program funding and availability, especially for Hometown Heroes.
6. Budget for Florida property taxes, windstorm coverage, and flood insurance where it applies, because those costs shape what you can afford.

Why work with a mortgage broker on this

Down payment assistance adds a second loan, a second set of guidelines, and often a second underwriter to your file. Programs change, funding rounds close, and limits are revised during the year. Working with a broker who originates these programs regularly is about knowing which combination is available for your county, your income, and your timeline before you write an offer.

MJS Financial LLC works with Florida buyers on conventional, FHA, VA, jumbo, and alternative documentation loans, including Florida Housing’s homebuyer programs. You can start a Boca Raton mortgage pre-approval, use our mortgage calculator to estimate payments, review current Boca Raton mortgage rates, or call 561-212-0002 to talk through what your file may qualify for. Pre-approval is not a guarantee of approval, and program eligibility is always confirmed by the lender and the agency.

Related reading: FHA loans in Florida, Palm Beach County FHA loan limits, and VA loans in Florida.

FAQ

Are Florida first-time homebuyer programs grants?

Mostly no. Florida Housing’s assistance programs are second mortgages. The HFA PLUS second mortgage is forgivable over five years, and the FL Assist and Hometown Heroes seconds are deferred but not forgivable, meaning the balance is repaid when you sell, refinance, or move out.

Do I have to be a first-time homebuyer to use these programs?

Florida Housing’s homebuyer loan program generally requires first-time homebuyer status under the IRS definition, which looks at whether you owned and occupied a primary residence in the last three years. There are exceptions, including for qualifying veterans and for purchases in federally designated targeted areas. Hometown Heroes also requires first-time buyer status.

What credit score do I need?

Florida Housing currently lists a 640 minimum credit score, and individual lenders and loan types can carry their own requirements. Some buyers qualify for other loan programs with different score minimums, so a decline from one lender does not mean you are out of options.

Can I use assistance with an FHA or VA loan?

Yes. The FL Assist and Hometown Heroes second mortgages can be used with FHA, VA, USDA, and conventional first mortgages. The HFA PLUS forgivable second mortgage is limited to the conventional HFA Preferred and HFA Advantage first mortgages.

Can I combine Hometown Heroes with another program?

It depends on the lender and the programs involved. Some combinations are permitted and some are not, and the answer can change with underwriting. Ask your lender to confirm the specific stack before you rely on it.

Does the second mortgage affect my debt to income ratio?

It can. The FL HLP second mortgage carries a monthly payment, and that payment may need to be counted. The FL Assist and Hometown Heroes seconds are deferred with no monthly payment while you occupy the home, but they still have to be repaid later.

What happens when I sell or refinance?

The deferred second mortgages become due. With a forgivable second, any balance not yet forgiven is typically due at that point as well. Plan for that before you refinance into a new loan.

Does Florida still offer a mortgage credit certificate?

Not through Florida Housing. The agency stopped offering MCCs and has not issued one since December 31, 2020. Some city and county agencies may still operate their own MCC programs.

Sources

• Florida Housing Finance Corporation, Homebuyer Overview
• Florida Housing, Hometown Heroes Program (2026 program requirements and limits dated July 2026)
• Florida Housing, Mortgage Credit Certificate FAQs
• Florida Housing press release, 2025 Hometown Heroes funding fully committed (February 27, 2026)
• U.S. Department of Veterans Affairs, VA home loans

What the VA loan benefit gives you in Florida

For a buyer with full entitlement, the VA program typically requires no down payment, and it never charges monthly mortgage insurance. That is money back in your budget every month compared with FHA or a low-down-payment conventional loan.

A few ground rules come with the benefit:

• The home must be your primary residence, and you generally need to move in within 60 days of closing. Active-duty buyers with special circumstances may have more time, so ask early.
• VA loans can be used for one to four residential units, plus one business unit, as long as you live in one of the units. They cannot be used to buy a pure investment property or a second home.
• VA does not set a minimum credit score. Your lender does, and most lenders want a score in the 580 to 620 range or better along with documented income and assets.
• The seller can credit you money toward closing costs. VA does not limit credits for closing costs, but it does limit seller concessions to no more than 4% of the home’s reasonable value as shown on the Notice of Value.
• On a purchase, only the VA funding fee can be financed into the loan. Other closing costs are paid at closing.

Step one: your Certificate of Eligibility

Your Certificate of Eligibility (COE) is what proves your entitlement and tells your lender how much guaranty you have available. You can request it yourself through VA, or your lender can usually pull it for you.

Service requirements vary by when you served. Broadly, VA looks for at least 90 continuous days of active duty during a qualifying period (24 continuous months for service between August 2, 1990 and today, or the full period you were ordered to active duty), six creditable years in the National Guard or Selected Reserve, or less than the minimum if you were discharged for a service-connected disability. Some qualifying exceptions apply as well, so it is worth confirming your own record rather than assuming.

Entitlement and the 2026 loan limit picture

This is where most of the confusion lives, and it helps to separate two situations.

Full entitlement. If you have never used the benefit, or you paid off a prior VA loan and had your entitlement restored, there is no VA loan limit on your purchase. You can buy at any price with no down payment as long as your lender approves the loan and the property appraises for the purchase price. Your VA loan amount is capped at the appraised value or the purchase price, whichever is lower.

Partial entitlement. If you still have an active VA loan, or a prior VA loan that has not been restored, the county loan limit comes back into the math. VA home loan limits match the FHFA conforming loan limits for the county, and they use the one-unit limit even if the property has more than one unit.

Here is the formula VA publishes:

• County one-unit limit multiplied by 25%, then
• Subtract the entitlement already charged on your COE.

For 2026, the baseline one-unit conforming limit is $832,750 in most counties, which is a 25% guaranty of about $208,188. High-cost counties carry higher limits, up to $1,249,125.

An example: a veteran with a prior $300,000 VA loan has roughly $75,000 of entitlement charged. In a baseline county, $208,188 minus $75,000 leaves about $133,188. Multiply that by four and you get a zero-down ceiling of roughly $532,750 for the next purchase. Above that ceiling, most lenders want a down payment that covers 25% of the overage, not a full conventional down payment.

If a prior loan is paid in full, restoration is not automatic. VA Form 26-1880 is what updates the record and frees the entitlement.

Palm Beach County and the rest of South Florida have been at the baseline limit, so the county you buy in usually matters less than whether your entitlement is full or partial.

What the funding fee costs in 2026

The funding fee is a one-time charge that funds the program for taxpayers. The rates below took effect April 7, 2023 and are unchanged for 2026:

The fee is a percentage of the loan amount, not the purchase price. On a $400,000 first-use purchase with nothing down, 2.15% is $8,600, and most buyers finance it into the loan rather than paying cash at closing.

Many veterans pay no funding fee at all. You are exempt if you receive VA compensation for a service-connected disability at any rating, if you are eligible for that compensation but receive retirement or active-duty pay instead, if you receive Dependency and Indemnity Compensation as a surviving spouse, if you have a proposed or memorandum rating before closing, or if you are on active duty and provide evidence of a Purple Heart on or before closing. If VA later awards compensation with an effective date retroactive to before your closing, you may be able to request a refund.

One tax note for 2026: the funding fee is deductible again for borrowers who itemize, subject to income phase-outs, under the 2025 tax law that VA confirmed applies to VA funding fees. Ask your tax professional how it applies to your return.

Florida property rules that shape a VA closing

The VA appraisal is not a home inspection. A VA-assigned appraiser confirms the reasonable value of the home and checks Minimum Property Requirements (MPRs), meaning the property is safe, sound, and sanitary. It is not a full mechanical review, so budget for your own home inspection. A Florida home inspection is one of the best dollars you will spend on a VA purchase.

Appraisal guidance changed May 1, 2026. VA updated Chapter 12 of the Lenders Handbook and removed several long-standing conditions for appraisals ordered on or after that date. Detached sheds, outbuildings, and detached garages are no longer required to meet MPRs, radon certifications in new construction were removed, non-vented heater certifications were removed, and exterior paint defects on homes built after 1978 no longer trigger required repairs. Homes built before 1978 still get lead-based paint attention, and a detached structure that is an actual safety hazard can still be flagged.

Termite and wood-destroying insect inspections are a Florida standard. Florida sits in VA’s moderate-to-heavy and very heavy termite probability zones, so a wood-destroying insect inspection is generally required on a VA purchase here. Units in high-rise condominiums where units are stacked vertically are exempt, but villa and townhome style projects with side-by-side units can still require it. If treatment or repairs are needed, the clearance work takes time, so order the inspection as early as the contract allows.

Flood insurance is required in a FEMA flood zone. If any part of the home sits in a Special Flood Hazard Area (zones starting with A or V), federal law and VA regulations require flood insurance for the life of the loan, and the premium must be escrowed. In South Florida this is the first check to run on coastal, canal-adjacent, and low-lying properties. If the elevation supports it, a Letter of Map Amendment can remove the requirement, but that takes a survey and FEMA processing time.

Wind and hazard coverage drives your payment. VA requires hazard insurance adequate for local risks. In Florida, wind coverage and deductibles vary widely by location and roof age, and the premium is part of the monthly payment your lender uses to qualify you. Get quotes before you make an offer, not after your inspection period ends.

Homes on well and septic systems will also need water quality and septic evaluations, which add a step and a timeline.

Buying a Florida condo with a VA loan

Condos are the most common snag in Florida VA transactions, because VA reviews the project, not just your unit. If the building is not on VA’s approved condo list, your lender can request single-unit approval for the specific unit you are buying. Single-unit approval is valid for six months and applies only to that unit.

When VA or your lender reviews a project, the items that typically matter are:

• At least 50% owner occupancy, or at least 50% sold for new construction
• No more than 15% of units 60 or more days delinquent on HOA dues
• At least 10% of the annual HOA budget going to reserves
• Adequate master insurance, including windstorm coverage and deductibles
• No active litigation that threatens the project, and no prohibited leasing restrictions such as seasoning clauses that force owners to live in a unit before renting
• Commercial space generally under 25% of the total

Two Florida-specific friction points deserve attention. First, high windstorm deductibles on a building’s master policy are a common reason coastal projects cannot be approved, so ask the HOA for the master policy early. Second, Florida’s post-Surfside reserve and milestone inspection requirements have pushed older associations to raise reserves and pass special assessments, and projects in the middle of that process can slow or block approval.

Plan on three to seven weeks for a condo document review if the building is not already approved, and start the HOA document request the day you go under contract.

How qualifying works for Florida buyers

VA does not publish a hard debt-to-income cutoff, but it does require lenders to measure residual income, which is what is left each month after taxes, the new housing payment, other debts, childcare, and estimated maintenance and utilities. Florida sits in VA’s South region. For loans of $80,000 or more, the guideline residual income is roughly $441 for a one-person household and about $1,003 for a family of four, with $80 added for each additional family member up to seven. When the debt-to-income ratio is above 41%, VA raises the residual income standard, so a high-ratio file needs more cushion.

Everything that shows up in a Florida housing payment counts in that math: property taxes, wind and hazard insurance, flood insurance, HOA dues, and any special assessment that is being financed.

Self-employed borrowers, partners, and LLC members should expect full documentation. VA does not offer a stated-income option, so qualifying runs through tax returns, K-1s, and business financials. If your returns show less income than you actually earn, ask about other documented income or bank statement options before you assume the VA loan will not work.

Why a local Florida VA lender helps

Most of the delays on VA files are not about the borrower. They are about entitlement being restored, a condo document package sitting with an unresponsive HOA, a termite inspection ordered in week three, or an insurance quote that changes the qualifying payment. A broker who closes VA loans in Florida every week can pull your COE, run the entitlement math before you make an offer, order the appraisals and inspections in the right sequence, and price the seller concessions correctly on the contract.

Frequently asked questions

Can I use a VA loan to buy a rental property in Florida?

No. VA loans are for primary residences. You can buy a duplex, triplex, or fourplex and rent the other units as long as you live in one, and you can generally rent the home later if you move, subject to your loan terms and any occupancy period. If your goal is an investment property with no owner occupancy, VA is not the tool. Investor options such as DSCR loans are built for that purpose.

Do I need a down payment on a VA loan in Florida?

With full entitlement and lender approval, typically no. With partial entitlement, you may need a down payment equal to 25% of the amount above your remaining entitlement ceiling.

Is there monthly mortgage insurance on a VA loan?

No. VA loans never carry monthly mortgage insurance. Instead there is the one-time funding fee, which many borrowers finance into the loan, and which many veterans are exempt from paying.

Does the funding fee change with the 2026 VA loan limits?

No. Funding fee rates are set by statute and have been unchanged since April 7, 2023. The conforming loan limits that feed the entitlement math update once a year.

How long does a VA loan take to close in Florida?

Thirty to forty-five days is common for a single-family home when the property is ready. Condo project review, required repairs, termite treatment, or flood insurance can extend that. No one can guarantee a closing date, so build a buffer if you have a lease ending or a rate lock expiring.

What if the VA appraisal comes in below the purchase price?

Your loan amount is capped at the lower of the appraised value or the purchase price. Your options are usually to renegotiate with the seller, bring additional cash, or move on. Talk to your lender before you agree to anything.

Next steps

If you are buying in Boca Raton, Delray Beach, Boynton Beach, or anywhere in Palm Beach County, the first move is getting your entitlement and buying power confirmed. MJS Financial is a Boca Raton mortgage brokerage that works with Florida veterans, active-duty service members, and Guard and Reserve buyers every week.

• Get pre-approved for a Florida VA loan
• Run your payment with the mortgage calculator
• Check current mortgage rates
• Call MJS Financial at 561-212-0002 to talk through entitlement, funding fees, and Florida property requirements

Sources for the numbers in this article: VA funding fee and closing cost guidance (rates effective April 7, 2023), VA entitlement and loan limit guidance (county limits follow FHFA conforming loan limits), VA eligibility requirements, VA News on the May 1, 2026 appraisal updates, VA Lenders Handbook Chapter 12, 38 CFR 36.4326 for flood insurance in special flood hazard areas, and the FHFA 2026 conforming loan limit announcement.

That is the 2026 FHFA conforming loan limit for a one-unit property in Palm Beach County. Borrow at or below that amount and you are in conventional territory — eligible for Fannie Mae or Freddie Mac backing, automated underwriting, and the most widely available pricing. Go above it and you enter jumbo territory, where the loan is held in a lender’s portfolio or sold to private investors, and the rules tighten.

2026 Conforming Loan Limit for Palm Beach County

For 2026, the Federal Housing Finance Agency (FHFA) set the national baseline conforming loan limit at $832,750 for one-unit properties — up $26,250 from 2025. Palm Beach County sits at this baseline. It is not designated a high-cost area for conforming loans, so the limit does not go higher here.

By comparison, Monroe County (the Florida Keys) is the only Florida county with a high-cost conforming limit in 2026: $990,150 for one unit. The absolute ceiling for any high-cost area nationwide is $1,249,125 (150% of the baseline).

Source: FHFA 2026 Conforming Loan Limits; Fannie Mae Lender Letter LL-2025-04.

What Changes When You Cross the Line

Loan backing

Conventional loans at or below the limit can be sold to Fannie Mae or Freddie Mac. Jumbo loans cannot — they stay on the lender’s books or go to private investors. That means no universal rulebook; each lender sets its own overlays.

Credit score

• Conventional: 620 minimum per Fannie/Freddie (many lenders overlay higher).
• Jumbo: 680 minimum at most lenders; 720+ for best rates and 10% down options; 760+ for the sharpest pricing.

Down payment

• Conventional: 3% down for first-time buyers (HomeReady/Home Possible); 5% standard; 20% to avoid PMI.
• Jumbo: 10–20% typical. Some lenders offer 5% down up to ~$1.3M with strong credit and reserves, but pricing is higher. Most competitive jumbo pricing starts at 20% down.

Debt-to-income (DTI) ratio

• Conventional: Up to 50% back-end DTI with automated approval.
• Jumbo: 43% hard cap at most lenders; some allow 45% with compensating factors (high reserves, large down payment, 760+ credit).

Cash reserves

• Conventional: Often 0–2 months PITI for primary residences; sometimes waived entirely by AUS.
• Jumbo: 6–12 months PITI in liquid assets after closing is standard; loans above $2M may require 18 months. Retirement accounts typically count at 60–70% of balance; investments at 70–80%.

Rates

For well-qualified borrowers (740+ credit, 20%+ down, 12+ months reserves), jumbo 30-year fixed rates in 2026 are often within 0.125–0.25% of conforming rates — and occasionally slightly lower. The gap widens at lower credit scores or higher LTVs.

Appraisal

• Conventional: One appraisal standard.
• Jumbo: Two appraisals often required above $1.5M loan amount.

FHA vs Conforming vs Jumbo in Palm Beach County

It is worth noting the FHA limit is different. For 2026, HUD classifies the Miami–Fort Lauderdale–West Palm Beach metro as a high-cost area for FHA. The one-unit FHA limit in Palm Beach County is $667,000.

That creates a gap: a borrower buying a one-unit primary residence priced between $667,001 and $832,750 cannot use FHA but can still use a conforming conventional loan. FHA allows 3.5% down with a 580+ score but carries upfront MIP (1.75%) plus monthly MIP for the life of the loan on most files. Conventional PMI auto-cancels at 78% LTV.

Common Boca Raton Scenarios

Purchase at $950,000 with 20% down ($190,000)

Loan amount: $760,000. Conforming. You are under the $832,750 limit. Standard conventional guidelines apply.

Purchase at $1,100,000 with 20% down ($220,000)

Loan amount: $880,000. Jumbo. You are above the Palm Beach County limit. Jumbo underwriting applies — tighter DTI, reserve requirements, and lender-specific overlays.

Purchase at $1,400,000 with 25% down ($350,000)

Loan amount: $1,050,000. Jumbo. At this loan amount, expect two appraisals, 12+ months reserves, and 720+ credit for the best pricing.

Strategies If You Are Near the Line

• Increase down payment to bring the loan amount at or below $832,750 and stay in conforming territory.
• Piggyback (80/10/10): First mortgage at 80% LTV (conforming), 10% HELOC or second mortgage, 10% down. Avoids jumbo underwriting and PMI. Not every lender offers this.
• Rate/term refinance later: If you take a jumbo now, you may be able to refinance into a conforming loan once the balance pays down below the limit or the limit increases in a future year.

FAQ

Is the conforming limit based on home price or loan amount?

Loan amount. A $1M home with a $200K down payment = $800K loan. That is conforming in Palm Beach County for 2026.

Does the limit change during the year?

No. The 2026 limits apply to loans delivered to Fannie Mae or Freddie Mac in calendar year 2026, regardless of when the loan was originated.

Can I get a jumbo loan with 10% down?

Yes, some portfolio lenders offer 90% LTV jumbo up to ~$2M–$3M with 720+ credit and 12+ months reserves. Expect a rate premium of roughly 0.25–0.50% versus 20% down.

Are jumbo rates always higher?

Not necessarily. For top-tier borrowers, jumbo 30-year fixed rates can match or occasionally beat conforming rates because lenders compete aggressively for high-balance, low-risk portfolios.

What counts as reserves?

Checking, savings, money market, stocks/bonds (discounted ~30%), retirement accounts (discounted ~40%). Gift funds and borrowed money do not count.

Does MJS Financial offer both conforming and jumbo loans?

Yes. As a broker, we access both conforming channels (Fannie/Freddie) and multiple jumbo investors. We match the loan structure to your scenario.

Next Step

If your loan amount is near the $832,750 line, the right structure can save you months of documentation hassle and thousands in rate or fees. Get pre-approved with MJS Financial and we will map out the cleanest path — conforming, jumbo, or a piggyback strategy.

Want to see current rates? Check our Boca Raton mortgage rates page. Prefer to run the numbers yourself? Use our mortgage calculator.

If you are looking to buy a home in Palm Beach County with an FHA loan, the loan limit for a single-family home in 2026 is $667,000. This limit applies to FHA case numbers assigned on or after January 1, 2026.

For context, the 2025 limit was $654,350. The increase reflects continued home price appreciation in the county.

How FHA Loan Limits Work

The Federal Housing Administration (FHA) sets loan limits by county each year based on median home prices. The National Housing Act requires FHA to calculate limits at 115% of the local median home price, subject to a national floor and ceiling.

• Floor (low-cost areas): $541,287 for a one-unit property in 2026
• Ceiling (high-cost areas): $1,249,125 for a one-unit property in 2026

Palm Beach County falls in the high-cost category, so its limit sits between the floor and ceiling based on local median prices.

Multi-Unit Property Limits in Palm Beach County (2026)

Source: HUD FHA Mortgage Limits for Palm Beach County, Florida, effective for case numbers assigned on or after January 1, 2026.

Why the County Limit Matters

The FHA loan limit is the maximum amount the FHA will insure for a mortgage in that county. It is not necessarily the maximum you can borrow — your loan amount is still based on the lower of the purchase price or appraised value, minus your down payment.

If you are buying a home priced above the limit, you would need to either:

• Bring a larger down payment to bring the loan amount under the limit
• Consider a conventional loan with a higher conforming limit ($832,750 for Palm Beach County in 2026)
• Explore a jumbo loan if the price exceeds both FHA and conforming limits

What This Means for Boca Raton and Palm Beach County Buyers

With a 2026 FHA limit of $667,000, many buyers in Boca Raton, West Palm Beach, Boynton Beach, Delray Beach, and surrounding areas will find the limit accommodates a wide range of home prices — especially with the FHA minimum down payment of 3.5%.

For example, with 3.5% down, a $667,000 loan limit supports a purchase price of approximately $691,000. Homes above that price would require a larger down payment to stay within the FHA limit.

FHA vs. Conventional Limits in Palm Beach County (2026)

The conventional conforming limit is higher, which gives buyers more flexibility if they qualify for conventional financing. FHA remains valuable for borrowers with lower credit scores, higher debt-to-income ratios, or smaller down payments.

Key Reminders for FHA Buyers

• Loan limits apply to the base loan amount, not the purchase price. Your down payment reduces the loan amount.
• Limits are based on the county, not the city or zip code. All of Palm Beach County shares the same limit.
• FHA requires the property to meet minimum property standards and pass an FHA appraisal.
• Mortgage insurance is required: an upfront premium (1.75% of the loan amount) plus annual premiums (0.55% for most 30-year loans with less than 5% down).
• Your actual loan amount also depends on your qualifications — credit score, debt-to-income ratio, employment history, and reserves.

Next Steps

The county limit is a starting point. Your real buying power depends on your full financial picture. The best way to know what you qualify for is to get a personalized pre-approval.

Frequently Asked Questions

What is the 2026 FHA loan limit for a single-family home in Palm Beach County?

$667,000. This applies to FHA case numbers assigned on or after January 1, 2026.

Can I borrow more than the FHA limit if I put more money down?

The FHA will not insure a loan above the county limit regardless of down payment. If the home price requires a loan above the limit, you would need a different loan type (conventional or jumbo) or a larger down payment to bring the loan amount under the FHA limit.

Does the limit include the upfront mortgage insurance premium?

No. The upfront mortgage insurance premium (1.75%) can be financed on top of the base loan amount, but the base loan amount cannot exceed the county limit.

What if I am buying a condo in Boca Raton?

The same county limit applies. However, the condo project must be on FHA’s approved list or meet FHA’s project eligibility requirements. This is a separate hurdle from the loan limit.

Where can I check the official FHA limit for a specific address?

You can use the HUD FHA Mortgage Limits lookup tool by entering the property address or county.

Loan limits are published annually by HUD and are subject to change. This article reflects the 2026 limits effective for case numbers assigned on or after January 1, 2026. Always verify current limits with your loan officer before making decisions.

Ready to See What You Qualify For?

Get a personalized quote from a local mortgage broker who knows the Palm Beach County market.

• Get pre-approved with MJS Financial
• Run the numbers with our mortgage calculator
• Learn more about FHA loans in Florida

Why Condo Approval Is Different

Fannie Mae, Freddie Mac, FHA, and VA all require the condominium project to meet eligibility standards before they will insure or guarantee a loan on any unit in that building. The lender orders a condo questionnaire (Fannie Mae Form 1076 / Freddie Mac Form 476) that the HOA or management company completes. The answers determine whether the project is “warrantable” — eligible for conventional financing — or “non-warrantable,” which pushes borrowers into portfolio or non-QM loans with higher rates, larger down payments, and shorter terms.

Since the 2021 Surfside collapse, Florida condos face extra scrutiny. State laws (SB 4-D, SB 154, HB 913) now mandate milestone structural inspections, Structural Integrity Reserve Studies (SIRS), and mandatory reserve funding for buildings three stories or taller. Lenders treat those requirements as part of the project review.

The Condo Questionnaire: What the Lender Asks

The standardized questionnaire covers the building’s finances, physical condition, ownership, insurance, and legal status. A single disqualifying answer can make the entire project ineligible. Here are the most common friction points:

Reserves and Budget

• Minimum 10% reserve allocation: The annual budget must allocate at least 10% of assessment income to replacement reserves. Fannie Mae’s LL-2026-03 raises this to 15% for applications dated on or after January 4, 2027.
• Reserve study age: A reserve study older than three years is a red flag.
• Florida SIRS compliance: For buildings three stories or taller, the Structural Integrity Reserve Study must be complete and reserves must be funded per its recommendations — no more reserve waivers for structural components.

Delinquency

• More than 15% of units 60+ days past due on HOA assessments disqualifies the project.

Insurance

• Master property insurance must provide 100% replacement-cost coverage.
• Deductible cannot exceed 5% of the coverage amount.
• Fidelity bond coverage is required for associations with 20+ units.

Litigation

• Pending litigation involving safety, structural soundness, or habitability is an automatic fail.
• Other litigation is evaluated case by case but often requires a legal opinion letter.

Deferred Maintenance and Critical Repairs

• Significant deferred maintenance or unsafe conditions not yet repaired disqualify the project.
• Fannie Mae’s LL-2026-03 introduced a hard threshold: if unfunded critical repairs exceed $10,000 per unit, the project is ineligible. A 100-unit building with a $1.2 million unfunded roof replacement ($12,000/unit) fails.

Ownership and Occupancy

• Single-entity ownership: One owner holding more than 20% of units in a 21+ unit project (or more than 2 units in a 5–20 unit project) is a fail.
• Investor concentration: Fannie Mae and Freddie Mac eliminated the 50% investor cap in 2026, but FHA still requires at least 50% owner-occupancy for project approval.

Commercial Space

• Non-residential space exceeding 35% of total floor area (25% for FHA) disqualifies the project.

Condotel Features

• Hotel-like operations, mandatory rental pooling, or on-site check-in desks make the project non-warrantable.

Florida-Specific Requirements (Post-Surfside)

If you are buying in a building three stories or taller, the association must have:

• Milestone inspection: Completed by a licensed engineer or architect. Coastal buildings (within 3 miles of coastline) by age 25; inland by age 30. Re-inspection every 10 years. Buildings 30+ years old as of July 1, 2022, had a December 31, 2024 deadline (with some extensions into 2025).
• Structural Integrity Reserve Study (SIRS): Identifies structural components (roof, load-bearing walls, foundation, fireproofing, plumbing, electrical, waterproofing, windows, doors) and calculates required reserve funding. Initial deadline was December 31, 2024 for most buildings; updates every 10 years.
• Mandatory reserve funding: Starting with budgets adopted on or after December 31, 2024, associations can no longer waive reserves for SIRS-identified components.

Lenders request the milestone inspection report, the SIRS, and two years of budgets showing reserves aligned to the SIRS recommendations. Missing or incomplete documents are a common cause of delays.

Loan Program Differences

Conventional (Fannie Mae / Freddie Mac)

• Full Review now required for all projects over 10 units (Limited Review retired August 3, 2026 per LL-2026-03).
• Form 1076/476 plus Form 1076A addendum for building safety/deferred maintenance.
• 10% reserve minimum (15% starting Jan 2027), $10k/unit critical repair threshold.

FHA

• Project must be on HUD’s approved condo list, or borrower can pursue Single-Unit Approval (spot approval) for up to 10% of units in an otherwise eligible building.
• Requires 50%+ owner-occupancy, 10% reserve allocation, 15% delinquency cap, 35% commercial space cap.
• Single-Unit Approval does not fix a troubled building — it only solves a paperwork gap.

VA

• Entire development must be on the VA-approved condo list.
• Buildings already FHA-approved may qualify for expedited VA review.
• Approval can take several months; plan ahead.

What “Non-Warrantable” Means for You

If the building fails any of the above, the condo is non-warrantable. Conventional, FHA, and VA financing are off the table. Options narrow to:

• Portfolio loans from lenders who keep the loan on their books.
• Non-QM loans with higher rates, 20–25%+ down payments, and often shorter terms (5/7-year ARMs, balloons).
• Cash.

Non-warrantable status also hurts resale value and limits your buyer pool later.

How to Avoid Surprises

1. Ask for the condo questionnaire early. Request the completed Form 1076/476 and 1076A from the listing agent or HOA before you write an offer.
2. Check the FHA and VA approved lists. Search HUD’s database and the VA’s condo lookup. If the building isn’t listed, assume extra time and uncertainty.
3. Verify Florida compliance. For 3+ story buildings, confirm milestone inspection, SIRS, and reserve funding are current.
4. Work with a local mortgage broker. A broker who knows Boca Raton and Palm Beach County buildings can often pre-screen projects before you spend money on an appraisal.

Frequently Asked Questions

Can I get a conventional loan on a condo with an expired reserve study?

A reserve study older than three years is a common reason for project ineligibility. The association will need to commission an updated study before the loan can proceed.

What if the HOA refuses to complete the questionnaire?

The loan cannot move forward. Some associations are reluctant due to liability concerns, but the form is standard and the lender requires it. A broker can sometimes help facilitate the conversation.

Does FHA Single-Unit Approval work for any building?

No. The building must still meet FHA’s owner-occupancy, delinquency, reserve, insurance, and litigation standards. Single-Unit Approval only waives the requirement that the entire project be pre-approved.

My building has a special assessment for roof repairs. Is that a deal-killer?

Not necessarily. A funded special assessment with a clear repayment plan is often acceptable. Unfunded critical repairs exceeding $10,000 per unit are the problem under current Fannie Mae rules.

Are there condos in Boca Raton that are pre-approved?

Some buildings have current Fannie Mae, FHA, or VA project approvals. A local broker can often identify them quickly and save you weeks of back-and-forth.

Next Steps

Condo financing adds a layer of complexity, but it is manageable when you know what to look for. The building’s financial health, insurance, maintenance status, and Florida compliance matter as much as your own qualifications.

If you are considering a condo purchase in Boca Raton or Palm Beach County, get pre-approved first. We can review the project’s eligibility early so you don’t waste time on a building that won’t finance. You can also estimate your payment or explore conventional loan options.

That does not mean LLC income cannot work. It means the documents need to tell the right story before you write an offer, refinance, or compare loan options.

MJS Financial helps Florida business owners, LLC members, and self-employed borrowers review income early so there are fewer surprises in underwriting. If you want a file-specific answer, start with mortgage pre-approval or call 561-212-0002.

Why LLC income gets reviewed differently

An LLC is flexible. That is useful for business planning, but it can make mortgage underwriting more detailed.

Depending on how the LLC is taxed, your income may show up through:

• IRS Form 1065 and Schedule K-1, common for partnership-style LLCs
• IRS Form 1120S and Schedule K-1, when the LLC elected S-corp tax treatment
• Schedule C, in some single-member LLC situations
• W-2 wages, owner draws, guaranteed payments, or distributions
• Business bank deposits that may support a bank-statement or non-QM review

That is why a Florida borrower can be profitable, cash-flow positive, and still need a careful document review. The lender is not just asking, “Did the LLC make money?” The practical questions are closer to: “Can this income be used for the mortgage, is it stable, and can the business afford for the borrower to keep taking it?”

What lenders usually want to see

Every loan program is different, but LLC-member mortgage files commonly start with a core package:

• Personal federal tax returns, usually one or two years depending on the program and findings
• Business tax returns for the LLC when required
• Schedule K-1s showing your share of LLC income, loss, credits, and distributions
• Year-to-date profit and loss statement if the current year needs support
• Business bank statements if cash flow or liquidity needs more context
• Operating agreement or documentation showing ownership percentage and management rights
• Evidence of guaranteed payments, draws, or distributions actually received
• CPA, tax preparer, or bookkeeper contact information if explanations may be needed

For a purchase in Boca Raton or elsewhere in Florida, it is better to collect this before the contract is signed. A clean pre-approval is much stronger when the income review has already looked at the LLC structure instead of assuming W-2-style documentation.

K-1 income is not always the same as cash in hand

One of the biggest LLC mortgage issues is the difference between taxable income and usable borrower income.

A Schedule K-1 can show your share of business income even if the LLC did not distribute all of that cash to you. The reverse can also happen: you may receive distributions that need to be reconciled with taxable income, business liquidity, and the company?s ability to keep operating after those withdrawals.

Fannie Mae?s current guidance for income or loss reported on Schedule K-1 discusses issues such as guaranteed payments, cash distributions, and business liquidity. Its business structures guidance also explains why LLCs may need to be reviewed based on how they report income for tax purposes.

In plain English: the tax return matters, but so does access to the money.

Guaranteed payments can help when they are documented

Some LLC members receive guaranteed payments. These can be easier to explain than irregular draws because they may look more like a recurring payment for services or use of capital.

That does not mean they are automatically accepted in every file. Lenders may look for history, consistency, tax reporting, and whether the payment is likely to continue. If guaranteed payments are a major part of your qualifying income, gather the K-1s, tax returns, and deposit history before the file goes to underwriting.

Ownership percentage matters

Mortgage underwriting often treats a borrower differently when the borrower owns a significant share of the business. A small passive ownership interest may be reviewed differently from a managing member who controls operations, withdrawals, debt, and liquidity.

For LLC members, ownership percentage can affect whether business tax returns are required, whether business liquidity must be reviewed, and how losses or distributions are treated. This is one reason a generic online pre-qualification can be misleading for business owners.

Business liquidity can become the deciding issue

An LLC may show income, but the lender still may need comfort that taking that income out of the company will not hurt the business.

That review can include business bank statements, balance sheets, current assets, current liabilities, year-to-date revenue, and whether the business has enough working capital. Fannie Mae?s partnership and LLC return analysis guidance is aimed at that kind of business-level review.

This is where working with a mortgage broker can help. The goal is not to force one loan type. The goal is to see whether conventional underwriting fits, whether the file needs a different documentation path, or whether another option is more practical.

Conventional, bank-statement, non-QM, and DSCR paths

LLC income can lead to several possible mortgage routes:

• Conventional mortgage: Best when tax returns, K-1s, and business documents support stable qualifying income.
• Bank statement mortgage: May help when tax returns understate cash flow but deposits support the borrower?s income story.
• Non-QM mortgage: May fit borrowers with strong overall files but income that does not match standard agency documentation.
• DSCR loan: May fit investment-property borrowers when the rental property?s cash flow is the main approval factor.

For broader route selection, see our guide to business owner mortgage options in Florida. If your income is mainly K-1 based, the K-1 income mortgage guide is a useful next read. If your LLC is taxed like a partnership, compare the details in our partnership income mortgage guide. If your LLC elected S-corp treatment, review the S-corp income mortgage guide.

When a bank-statement loan may be cleaner

Some LLC owners have strong business deposits but low taxable income because of deductions, depreciation, reinvestment, or uneven distributions. In that situation, a conventional tax-return path may not show the full cash-flow picture.

A bank statement mortgage for self-employed Florida borrowers may be worth comparing. It is not automatically better. Rates, down payment, credit profile, reserves, and property type still matter. But it can be a practical fallback when the tax-return calculation does not match the borrower?s actual cash flow.

Florida-specific issues to review early

Florida borrowers should also look beyond income. The payment picture can move quickly because of insurance, HOA dues, condo assessments, flood-zone requirements, and property taxes.

Before you rely on LLC income for a purchase, review:

• Estimated homeowners insurance and flood insurance, if applicable
• Condo or HOA dues
• Property tax assumptions
• Current mortgage pricing through a Florida mortgage rate quote
• Payment scenarios using a mortgage calculator

For investors buying through or alongside an LLC, also compare whether a Florida DSCR loan makes more sense than trying to qualify personally with business income.

Document checklist for LLC members

If you are getting ready to apply, start with this file:

• Last two years of personal federal tax returns
• Last two years of LLC business returns, if filed and available
• All Schedule K-1s tied to the LLC
• Year-to-date profit and loss statement
• Recent business bank statements
• Recent personal bank statements showing distributions or transfers
• Operating agreement or ownership documentation
• Explanation of guaranteed payments, member draws, and distributions
• Current debt schedule for the business, if available
• CPA or tax preparer contact information

You do not need every document for every program, but having them ready lets the mortgage broker identify the cleanest route faster.

Common mistakes LLC members should avoid

• Assuming profit equals qualifying income. Underwriting may adjust income based on tax treatment, losses, liquidity, distributions, and stability.
• Waiting until underwriting to explain the LLC. Entity structure should be reviewed before the file is submitted.
• Ignoring business liquidity. A lender may care whether the LLC can support continued withdrawals.
• Mixing personal and business funds without a clean paper trail. Transfers should be explainable.
• Choosing the wrong loan path too early. Conventional, bank-statement, non-QM, and DSCR options should be compared against the actual documents.

FAQ

Can LLC income count for a mortgage in Florida?

Yes, LLC income may count when the documentation supports stable qualifying income and the loan program allows it. The review often depends on tax returns, K-1s, distributions, ownership percentage, business liquidity, and whether the income is likely to continue.

Do lenders count K-1 income if I did not receive distributions?

It depends. A K-1 can report income even when cash was not fully distributed. Lenders may need to verify access to the income and confirm that the business has enough liquidity to support withdrawals.

Are guaranteed payments from an LLC usable for mortgage qualification?

They may be usable when they are documented, stable, and consistent with the borrower?s tax returns and deposit history. The exact treatment depends on the loan program and file details.

What if my LLC tax returns show low income?

If tax returns do not support enough income, a bank-statement mortgage, non-QM loan, asset-based option, or DSCR loan for an investment property may be worth reviewing. The right path depends on credit, down payment, reserves, property type, and cash flow.

Talk to a Florida mortgage broker before you write an offer

LLC income is workable, but it should be reviewed early. The cleaner the document package, the easier it is to decide whether a conventional, bank-statement, non-QM, or DSCR path fits.

MJS Financial works with Florida business owners and LLC members who need practical mortgage guidance, not a one-size-fits-all bank answer. Start your Florida mortgage pre-approval, request a personalized quote, or call 561-212-0002.

Sources

• Fannie Mae Selling Guide: Business Structures
• Fannie Mae Selling Guide: Income or Loss Reported on Schedule K-1
• Fannie Mae Selling Guide: Analyzing Partnership Returns for a Partnership or LLC
• Freddie Mac Single-Family Seller/Servicer Guide Chapter 5304: Self-Employed Income
• CFPB: Ability-to-Repay and Qualified Mortgage Standards

That does not automatically mean you cannot qualify. It does mean the loan should be reviewed by someone who knows how partnership and LLC income is documented for a mortgage. For Florida buyers, especially business owners buying in Boca Raton or Palm Beach County, it is smart to gather the right documents before you make an offer or lock in a timeline.

This guide explains what lenders usually look for when partnership income is part of the mortgage application, how LLC income may be treated, and when another loan path may fit better.

Why partnership income gets extra review

Partnership and LLC income can be confusing because taxable income and usable cash flow are not always the same thing. A borrower may show profit on a K-1 but leave cash inside the business. Another borrower may receive regular distributions, but the business return may show expenses, depreciation, or debt that must be reviewed before income can be counted.

For mortgage approval, the lender is not just asking, "Did the business make money?" The real questions are usually:

• Is the income stable enough to use?
• Does the borrower have access to the income?
• Is there a history of receiving distributions or guaranteed payments?
• Can the business support continued withdrawals?
• Do the tax returns and K-1s tell the same story as the borrower's bank deposits?

This is why partnership income often takes more documentation than a basic paystub-and-W-2 file.

Documents partners and LLC members should gather early

Every file is different, but partnership or LLC income review commonly starts with these items:

• Personal federal tax returns, usually for the most recent two years.
• Business federal tax returns, often Form 1065 for a partnership or LLC taxed as a partnership.
• Schedule K-1s showing the borrower's share of income, loss, deductions, credits, and ownership percentage.
• Year-to-date profit and loss statement, especially if the current year matters to the approval.
• Business balance sheet if requested.
• Evidence of distributions, guaranteed payments, or partner draws.
• Business bank statements when cash flow or access to funds needs to be documented.
• Operating agreement or partnership agreement if ownership, distribution rights, or access to funds is unclear.

Do not wait until the week before closing to find these. If your accountant, bookkeeper, or business partner needs time to provide documents, that delay can affect the mortgage timeline.

Schedule K-1 income is only one part of the file

A Schedule K-1 is important because it shows the borrower's share of business income or loss. But the K-1 alone may not answer the biggest question: can that income actually be used to repay a mortgage?

For example, a K-1 may report income that stays in the business instead of being distributed to the partner. A lender may need to review whether the borrower received actual cash distributions, whether the business can support those distributions, and whether the borrower has enough ownership or authority to access the funds.

That is why a partnership-income file often overlaps with a broader K-1 income mortgage review. The K-1 matters, but the surrounding business return, liquidity, and payment history matter too.

LLC income depends on how the business is taxed

LLCs can be especially tricky because an LLC is a legal structure, not always a single tax treatment. Some LLCs are taxed as partnerships and report income on Form 1065 with Schedule K-1s. Others may elect S-corp treatment, which can introduce W-2 wages, shareholder distributions, and S-corp return analysis.

If your LLC is taxed as an S corporation, the file may look closer to an S-corp income mortgage review. If it is taxed as a partnership, the lender may focus more on partner distributions, guaranteed payments, ownership percentage, and partnership return analysis.

The practical point is simple: do not describe the income only as "LLC income." For a mortgage review, the tax treatment, ownership percentage, and payment history drive the documentation.

Guaranteed payments vs. distributions

Partners may receive income in different ways. Two common categories are guaranteed payments and distributions.

Guaranteed payments are often paid to a partner for services or use of capital, and they may be more predictable than discretionary distributions. Distributions, on the other hand, can depend on business profit, partner approval, retained earnings, or cash needs inside the company.

A lender may treat these differently. Regular, documented payments with a clear history are easier to evaluate than irregular draws that appear only when the business has extra cash. If your income changes month to month, bring the full picture early so the file can be structured properly.

What can weaken a partnership-income mortgage file?

Partnership income can still qualify, but these issues can create friction:

• Large year-over-year income decline.
• K-1 income with little or no actual distribution history.
• Business losses that offset personal income.
• High business debt or weak liquidity.
• Ownership below the level needed to control distributions or access funds.
• Incomplete tax returns, missing K-1s, or unsigned returns.
• Current-year income that is materially different from prior tax years.

None of these automatically ends the conversation. They just mean the mortgage strategy may need more care.

When a standard tax-return review may not be the best fit

Sometimes the tax-return version of income does not reflect the borrower's true cash flow. This is common for business owners who use legal deductions, reinvest in the business, or have uneven distributions.

In that case, it may be worth comparing several paths:

• A conventional tax-return review if the partnership income is stable and well documented.
• A bank statement mortgage if deposits tell a stronger income story than tax returns.
• A non-QM or asset-based review if taxable income is low but assets or cash flow are strong.
• A Florida DSCR loan if the property is an investment rental and the loan can be evaluated mainly through property cash flow.

For a broader comparison, see our guide to business owner mortgage options in Florida.

Florida timing issues business owners should not ignore

In Boca Raton and other Florida markets, the mortgage review is not the only moving part. Insurance costs, condo or HOA dues, property taxes, and timing around tax filing can all affect approval.

If you are buying before your next tax return is filed, ask early whether the current-year income can help. If you just filed a return showing lower income because of deductions or a business transition, that may change the loan strategy. And if the property has high insurance or association costs, your usable income needs to support the full housing payment, not just principal and interest.

Before you tour homes seriously, it is worth getting a real mortgage pre-approval based on your actual business documents, not a rough estimate.

Quick checklist before applying

If partnership or LLC income will be used for the mortgage, gather these before the file is submitted:

• Two years of personal tax returns.
• Two years of partnership or LLC business tax returns.
• All related K-1s.
• Recent business bank statements.
• Year-to-date profit and loss statement.
• Documentation of distributions, draws, or guaranteed payments.
• Operating agreement or partnership agreement if requested.
• Explanation for any major income decline, ownership change, or unusual business event.

You can also use the mortgage calculator to estimate payment ranges and check current mortgage rate context, but the real answer comes from reviewing the full file.

Talk to a Florida mortgage broker before the file gets messy

Partnership income is workable, but it should not be treated like simple salary income. The earlier the documents are reviewed, the easier it is to spot whether the file fits a conventional route, bank statement route, asset-based route, non-QM path, or DSCR option for an investment property.

MJS Financial helps Florida business owners and self-employed borrowers sort through these options before they waste time on the wrong loan structure. If you are a partner, LLC member, or business owner planning to buy or refinance, call 561-212-0002 or start a pre-approval request.

FAQ

Can partnership income count for a mortgage in Florida?

Yes, partnership income can count when it is stable, documented, and likely to continue. The lender may review personal tax returns, business returns, K-1s, distributions, and business liquidity before deciding how much income can be used.

Is LLC income the same as self-employed income for a mortgage?

Often, yes, but the details depend on how the LLC is taxed and how much ownership the borrower has. An LLC taxed as a partnership may be reviewed differently from an LLC taxed as an S corporation.

Do lenders use K-1 income or actual distributions?

They may review both. K-1 income shows the borrower's share of business income or loss, while distributions help show whether the borrower actually receives usable cash flow from the business.

What if my tax returns show low income because of business deductions?

You may still have options. A mortgage broker can compare tax-return qualification with bank statement loans, non-QM options, asset-based approaches, or DSCR financing for rental properties.

Sources

• Fannie Mae Selling Guide: Analyzing Partnership Returns for a Partnership or LLC
• Fannie Mae Selling Guide: Business Structures
• Fannie Mae Selling Guide: Schedule K-1 Income
• Fannie Mae Selling Guide: Self-Employed Borrower Documentation
• CFPB: Ability-to-Repay and Qualified Mortgage Rule Resources

The right answer depends on how the business is structured, how income is reported, how much cash actually reaches the borrower, and whether the property is a primary home, second home, or rental investment. That is why business-owner mortgage files should be reviewed early, before you write an offer or assume your tax return tells the whole story.

MJS Financial helps Florida business owners compare mortgage options and gather the documents lenders usually want to see. If you are buying in Boca Raton, refinancing in South Florida, or financing an investment property anywhere in Florida, the goal is simple: identify the cleanest qualifying path before underwriting starts.

Why business-owner mortgage files are different

W-2 borrowers usually qualify from pay stubs, W-2s, and employment history. Business owners are different because income can move through tax returns, K-1s, shareholder wages, distributions, business bank accounts, retained earnings, asset sales, or rental-property cash flow.

That does not make approval impossible. It just means the file needs a better first review. A lender may need to understand:

• Whether you are a sole proprietor, LLC member or partner, S-corp shareholder, or C-corp owner.
• How much of the business you own.
• Whether income is stable, increasing, declining, or unusually volatile.
• Whether the cash used to qualify is supported by tax returns, distributions, bank deposits, assets, or rent.
• Whether business debt, write-offs, or retained earnings affect the personal qualifying picture.

For conventional loans, lenders often rely heavily on tax-return analysis and agency rules. For non-QM and bank-statement options, the review may focus more on deposits, cash flow, and compensating factors. For rental-property financing, a Florida DSCR loan may qualify primarily from the property’s rent compared with its payment.

Option 1: Traditional tax-return mortgage review

A tax-return mortgage path can work well when the business owner’s adjusted income is strong after allowable business expenses and required adjustments. This is often the cleanest route for borrowers with steady earnings, organized returns, and a business history that is easy to document.

Expect the lender to ask for personal returns, business returns when applicable, K-1s, year-to-date profit and loss information, balance sheets, and sometimes business bank statements. The exact list depends on the loan program, ownership percentage, business type, and automated underwriting findings.

This path may be best when:

• Your taxable income supports the payment.
• Your business has a stable or improving income trend.
• You want a conventional, FHA, VA, or other traditional mortgage review.
• You can document business income without needing alternative-income treatment.

If your returns show large write-offs or the business had a down year, you may still have options. That is when a broader review matters.

Option 2: K-1 income review for partners and shareholders

Business owners who receive Schedule K-1 income need a more specific review. A K-1 can show ordinary business income, losses, guaranteed payments, distributions, or other pass-through items. The question is not just whether the income appears on paper. The lender also needs to understand whether the borrower can actually access the funds and whether the business can support ongoing distributions.

For a deeper document checklist, see MJS Financial’s guide to K-1 income for a mortgage in Florida. That article explains how partnership and S-corp K-1 income may be reviewed, including distributions, liquidity, and business-return support.

This path may fit when:

• You own part of a partnership, LLC, or S-corporation.
• Your income flows through Schedule K-1.
• Your tax returns show business income that needs entity-level context.
• You can document distributions, ownership, and business stability.

Option 3: S-corp wages and shareholder distributions

S-corp borrowers often have multiple income pieces: W-2 wages from the company, K-1 income, shareholder distributions, and business retained earnings. A lender may treat those pieces differently. W-2 wages are not the same as distributions, and paper income does not always equal usable cash flow.

If you own an S-corp, review the dedicated MJS article on S-corp income for a mortgage in Florida. It covers wages, distributions, K-1 treatment, business returns, and liquidity questions that often come up in underwriting.

This path may fit when:

• You pay yourself through payroll from your S-corp.
• You also receive shareholder distributions or K-1 income.
• Your personal income and business income need to be reviewed together.
• You want to know whether conventional or non-QM options make more sense.

Option 4: Bank statement mortgage for self-employed borrowers

A bank statement mortgage may help when tax returns do not reflect the business owner’s actual cash flow. Instead of relying only on taxable income, the lender reviews qualifying deposits over a set period, often with adjustments for business expenses and program-specific rules.

This can be useful for self-employed borrowers with strong revenue but heavy write-offs. It is not a shortcut around credit, down payment, reserves, or ability-to-repay review. It is simply a different way to document income.

Start with MJS Financial’s guide to bank statement mortgages in Florida for self-employed borrowers if your tax-return income looks lower than your real cash flow.

This path may fit when:

• Your bank deposits are stronger than your taxable income.
• You have consistent business or personal bank statements.
• You can document the source of deposits.
• You are comfortable comparing non-QM pricing, reserves, and down payment requirements.

Option 5: Asset-based, investment-income, or non-QM review

Some business owners have complex income that does not fit neatly into one box. Retained business earnings, portfolio income, trust income, capital gains, notes receivable, retirement assets, and liquid reserves may all matter depending on the loan type.

For borrowers with strong assets but complicated income, MJS may review options such as investment income for a mortgage, capital gains income, notes receivable income, asset depletion, or broader non-QM programs.

This path may fit when:

• Your income is real but irregular.
• You have significant liquid assets or portfolio income.
• Your business recently changed structure, ownership, or income pattern.
• A traditional tax-return review does not tell the full story.

Option 6: DSCR loans for Florida investment properties

If the property is a rental investment, a DSCR loan may be worth reviewing. DSCR stands for debt service coverage ratio. Instead of qualifying mainly from the borrower’s personal income, the lender looks at whether the rental income can support the property payment.

This is especially relevant for business owners whose personal income documentation is complex but who are buying or refinancing a rental property. DSCR is not for every scenario, and pricing, down payment, reserves, prepayment penalties, and property cash flow still matter. But it can be a strong option when the property economics are clear.

Learn more on MJS Financial’s Florida DSCR loan page.

Documents Florida business owners should gather early

The exact list changes by program, but business owners can usually move faster by gathering these items before pre-approval:

• Two years of personal federal tax returns.
• Two years of business returns, if applicable.
• Schedule K-1s for partnership, LLC, or S-corp ownership.
• Year-to-date profit and loss statement and balance sheet.
• Recent business and personal bank statements.
• Business license, CPA letter, or proof the business is active when requested.
• Operating agreement, partnership agreement, or corporate documents when ownership needs support.
• Asset statements for down payment, reserves, or asset-based qualifying.
• Lease, rent schedule, or rental-property details for investment-property financing.

Do not wait until a contract deadline to find out which documents matter. A Boca Raton or South Florida purchase can move quickly, and business-owner income review often takes longer than a basic W-2 pre-approval.

How to choose the right mortgage path

The best mortgage option is usually the one that matches how your income is actually documented. A business owner with clean tax-return income should not automatically jump to a bank statement loan. A borrower with strong deposits but low taxable income should not assume they are stuck. A rental investor may be better served by DSCR than by trying to force complex business income into a personal mortgage file.

A practical first review should answer four questions:

• Does tax-return income support the target payment?
• If not, do bank statements, assets, K-1 distributions, or other income sources support a better path?
• Is the property a primary home, second home, or investment property?
• Which option gives the borrower the best balance of approval strength, rate, costs, speed, and documentation burden?

That comparison is where a mortgage broker can help. MJS Financial can look across multiple lender options instead of forcing every business owner into one bank’s narrow box.

Talk with a Florida mortgage broker before you shop

If you are a business owner buying a home, refinancing, or financing an investment property in Florida, get your income reviewed before you rely on an online estimate. The earlier you know the right path, the easier it is to set a real budget and avoid underwriting surprises.

Start a mortgage pre-approval with MJS Financial, check current Boca Raton mortgage rates, or use the mortgage calculator to estimate payment scenarios. You can also call MJS Financial at 561-212-0002 for a direct conversation about your file.

FAQ

Can a business owner get a conventional mortgage in Florida?

Yes. Many business owners qualify for conventional loans when tax-return income, business history, credit, assets, and debt-to-income ratios support the file. The key is documenting income correctly and reviewing business returns early.

Is a bank statement loan better than a tax-return mortgage?

Not always. A tax-return mortgage may offer better pricing when taxable income is strong enough. A bank statement loan may help when cash flow is stronger than taxable income. The better option depends on income, credit, down payment, property type, and lender guidelines.

Can K-1 income count for a mortgage?

K-1 income may count, but lenders often need to review ownership, distributions, business liquidity, and tax returns. Paper income that cannot be accessed by the borrower may be treated differently than cash actually received.

Can a business owner use a DSCR loan?

Yes, when the property is an eligible rental investment and the rental income supports the payment under the lender’s DSCR rules. DSCR loans are not usually used for primary residences.

Sources

• Fannie Mae: Underwriting Factors and Documentation for a Self-Employed Borrower
• Fannie Mae: Business Structures
• Fannie Mae: Schedule K-1 Income
• Fannie Mae: Analyzing Partnership Returns for a Partnership or LLC
• Freddie Mac: Mortgage Options for Self-Employed Borrowers
• CFPB: What is a Qualified Mortgage?