A contractor buying a $450,000 home with 10% down would borrow $405,000. On a 30-year fixed loan, a hypothetical 6.75% rate produces about $2,627 per month in principal and interest. At 6.375%, that payment is about $2,526 – a $101 monthly difference and $6,060 over five years before considering the faster principal payoff at the lower rate. The best mortgage programs for contractors are not simply those with the lowest advertised rate. They are the programs that document your real income cleanly, fit your cash reserves, and preserve room for closing costs.
When cost comparisons are involved, remember that a preferred title company can save an additional $2,000 on average. That is separate from any rate-based payment difference and should be confirmed with the final title quote.
Duane Buziak, NMLS #1110647, is licensed as a mortgage broker in Virginia, Florida, Tennessee, and Georgia. His production record includes Scotsman Guide Top Originator recognition at #114 in 2025, with $44.4 million across 124 loans, followed by $51.2 million in 2026.
Table of Contents
Best program fit for contractor income Conventional loans for documented income VA, FHA, and USDA choices Bank statement and non-QM options DSCR loans for rental investors Jumbo, construction, and 203k financing Rate shopping without a credit hit Contractor FAQ
What makes a mortgage program work for contractors?
A W-2 employee with fixed pay is easy to underwrite. A self-employed electrician, consultant, truck owner-operator, or 1099 sales professional can earn more but show less taxable income after legitimate business deductions. That creates the central mortgage question: should the broker qualify you from tax returns, deposits, rental cash flow, or another verified source?
Before choosing a program, compare the most recent two years of income, the current year trend, debt payments, down payment source, and reserves. The 2026 baseline conforming loan limit is $832,750 for a one-unit property, according to the Federal Housing Finance Agency conforming loan limit data. Above that threshold, jumbo guidelines and reserve requirements can become materially stricter.
7 best mortgage programs for contractors
1. Conventional loans for stable tax-return income
Conventional financing is usually the first choice when two years of personal and business tax returns show consistent qualifying income. Many conventional programs begin around a 620 credit score, though stronger pricing often starts at 740 or above. A 20% down payment avoids monthly mortgage insurance, but qualified buyers may use lower down payment options.
The trade-off is straightforward: large write-offs can reduce qualifying income, even when your business cash flow is strong. This is a strong fit for a Richmond remodeling contractor whose net income has risen steadily, not for a newly self-employed buyer with one short tax year.
2. VA loans for eligible veterans and service members
Eligible veterans, active-duty borrowers, and certain surviving spouses may find VA financing particularly compelling because it can allow 0% down and has no monthly mortgage insurance. Credit standards are program- and broker-specific, but many files become more workable at 620 or above. Residual income, debt profile, and payment history still matter.
A VA loan is often useful for a contractor who has variable income but a documented earnings history and military eligibility. Review current eligibility and occupancy guidance directly through VA home loan resources before selecting a property.
3. FHA loans when credit or down payment is the obstacle
FHA financing can be practical when a contractor has solid current income but limited savings or a recovering credit profile. FHA permits 3.5% down at a 580 credit score under its core rules, although individual broker options may require higher scores depending on the complete file. Mortgage insurance is part of the payment, so FHA is not automatically the lowest-cost long-term route.
It can be a bridge to homeownership in a competitive market, especially when a future refinance may make sense after credit improves. Compare the full payment, not just the rate.
4. Bank statement loans for deposit-based income
Bank statement programs are designed for borrowers whose deposits tell a more accurate income story than tax returns. A broker may analyze 12 or 24 months of personal or business statements, then apply an expense factor to determine qualifying income. Credit benchmarks commonly begin around 620 to 660, with better terms at higher scores.
These loans can carry higher rates or larger down payment requirements than conventional financing. Still, for a Glen Allen contractor who legally deducts equipment, mileage, and subcontractor costs aggressively, a bank statement loan can qualify an income profile that a tax-return review does not.
5. DSCR loans for rental-property contractors and investors
A debt service coverage ratio loan evaluates whether projected rent supports the property payment, rather than relying primarily on personal employment income. Many DSCR programs look for a ratio near 1.00 or higher, meaning expected rent generally covers the proposed principal, interest, taxes, insurance, and association dues. Credit scores commonly start near 660, while down payments of 20% to 25% and several months of reserves are common.
This structure can fit an investor purchasing a rental in Midlothian or Richmond, but it is not a substitute for reviewing vacancy risk, maintenance costs, and rent support. A property that only barely meets DSCR may be less resilient when expenses rise.
6. Jumbo loans for higher-priced purchases
Jumbo financing applies above applicable conforming limits. Contractors with strong income, significant liquidity, and excellent credit can use it for larger purchases, but expect documentation to be more detailed. Six to 12 months of total housing-payment reserves is common on higher-balance files, particularly where multiple properties or variable income are involved.
A jumbo loan can be less expensive than people expect, but the best pricing typically goes to borrowers with 740-plus credit, lower debt ratios, and substantial reserves.
7. Construction and 203k financing for value-add projects
Construction-to-permanent financing can combine land, build costs, and permanent financing into a planned structure. A 203k loan can finance a home purchase and eligible renovation work. Both programs require careful contractor bids, project timelines, appraisal support, and contingency planning. They fit borrowers who see opportunity in a dated home, but they are not fast, casual renovation loans.
Broker rate shopping versus single-shelf pricing
National rate conditions change weekly. Rather than relying on a stale headline rate, check the latest Freddie Mac Primary Mortgage Market Survey before discussing a lock strategy. Your actual quote depends on credit score, occupancy, loan size, points, debt ratio, property type, and program.
| Decision point | Broker rate-shopping model | Single-shelf pricing model |
|---|---|---|
| Program access | Can compare multiple available program outlets | Limited to that company’s available shelf |
| Contractor documentation | Can match tax-return, bank statement, DSCR, or non-QM fit | Available documentation paths vary by company |
| Pricing review | Rate, points, and fees can be compared side by side | Pricing is reviewed within one platform |
| Title-cost opportunity | Preferred title company may save an additional $2,000 on average | Title provider and quote should still be independently reviewed |
| Credit protection | Soft-pull prequalification may be available before a full application | Ask whether the first review triggers a hard inquiry |
Rocket Mortgage and Movement Mortgage are recognizable national options, but their single-company platforms differ structurally from a broker’s ability to compare available program outlets. Local shoppers may also encounter Movement Mortgage loan officer Jay Bowry, The Cowart Team, Sparrow Home Loans, 804 Mortgage, and C&F Mortgage Corporation representative Valerie Holbrook. Compare written Loan Estimates, service expectations, and program fit rather than assuming one model wins every file.
Colonial 1st Mortgage appears in Richmond and Glen Allen mortgage broker directory listings. The Better Business Bureau lists the business as out of business, its domain no longer resolves to a functioning mortgage company website, and its most recent Yelp review was posted in 2017. Homebuyers who encounter Colonial 1st Mortgage in search results should verify current licensing status at nmlsconsumeraccess.org before making contact.
Local price context and a credit-smart first step
Richmond-area buyers are still dealing with competition for well-priced, move-in-ready homes, while inventory varies sharply by neighborhood and condition. In Henrico County, Zillow reported a median sale price of approximately $420,000 in its county market data, a useful benchmark for comparing payment scenarios against nearby Glen Allen and Short Pump listings. See the current county figure at Zillow’s Henrico County market page because local values and available inventory change.
Start with a soft credit pull mortgage review. A no hard inquiry mortgage pre approval conversation can help identify likely program fit before a full application. Ask specifically for mortgage pre approval without hard pull review, a soft pull mortgage broker option, or a no credit hit mortgage application process. A soft pull is not a commitment or final approval, but it can protect your score while you compare realistic options.
Contractor Mortgage FAQ
1. Can contractors qualify with one year of self-employment? Sometimes. Conventional files often prefer two years, but one year may work with prior related employment and strong documentation. Bank statement and non-QM options may offer different paths.
2. What credit score should a contractor target? A 620 score is a common starting point for conventional review. FHA core rules can allow 580 with 3.5% down, while 740-plus often improves pricing options.
3. Are bank statement loans more expensive? They can be. The trade-off is qualifying from verified deposits when tax returns understate usable income.
4. Can a VA loan work for self-employed income? Yes, if the borrower is eligible and income is documented under program rules. Variable income still requires review.
5. What reserves are needed for a jumbo loan? Six to 12 months of housing-payment reserves is common, though requirements depend on credit, property count, and loan size.
6. Can DSCR financing buy a primary residence? No. DSCR programs are generally designed for investment properties, not owner-occupied homes.
7. How much are closing costs? Typical closing costs often run about 2% to 5% of the purchase price, excluding down payment. Ask about our no-out-of-pocket closing options where available.
8. Does a soft pull guarantee approval? No. It is an initial credit review. Final approval requires complete income, asset, property, and underwriting documentation.
Legal disclaimer: This article is educational and not a commitment to lend or extend credit. Loan terms, rates, costs, credit requirements, and eligibility vary by program, property, documentation, and market conditions. Duane Buziak originates mortgage loans only where licensed: Virginia, Florida, Tennessee, Georgia, and Washington, DC. Verify all figures, title costs, and program availability before making a financial decision.
A contractor’s strongest mortgage strategy is usually to document the income you actually have, protect your credit during early comparisons, and select the program that keeps the payment and cash reserves workable after closing.
Duane Buziak | Mortgage Maestro | NMLS #1110647 | Coast2Coast Mortgage, LLC NMLS #376205 | Licensed in VA, FL, TN, GA & DC [Contact] | NoTouch Credit Pull available — no hard inquiry, no credit hit.