The Fed Hiked and Mortgage Rates Shrugged. If You Are Self-Employed, October 15 Matters More
The average top-tier 30-year fixed rate is 7.20% per Mortgage News Daily, up 0.01 on Friday and up 0.08 since last Monday. The index touched 7.24% midweek, a new 52-week high, before settling back. The Federal Reserve raised its benchmark rate a quarter point on Wednesday, the first hike since July 2023, and mortgage rates finished the week almost exactly where they sat Wednesday morning before the announcement. That is the lesson of Fed week: the market had already priced it in. If you are self-employed, though, the date that will actually decide your rate and your approval is not a Fed meeting. It is October 15, and I want to explain why before it gets here.
What the Fed did, and what mortgage rates did
The Fed's rate-setting committee voted unanimously to raise the federal funds target range to 3.75% to 4.00%. The statement was short and blunt: inflation remains elevated, and the committee said it will deliver price stability. Its updated projections left room for another hike or two into next year. That is a more hawkish Fed than anyone expected in January, when the conversation was still about cuts.
Here is what mortgage rates did in response: almost nothing. The daily index ran up to 7.24% ahead of the meeting, improved Thursday as bonds rallied, gave a little back Friday, and closed the week at 7.20%. Freddie Mac's weekly survey, which lags the daily index, jumped 0.19 to 6.95%, its highest reading of the year, mostly catching up to the prior week's move. I wrote a full explainer in July on why a Fed hike does not pass straight through to your mortgage: your 30-year rate is set by the bond market, which moves on what it expects the Fed to do over the next several years, not on the announcement itself. This week was a clean example. Where rates go from here depends on the next inflation and jobs reports, and I do not make rate predictions.
Why October 15 matters if you are self-employed
If you own a business, freelance, or earn 1099 income and you filed an extension in April, your 2025 federal return is due October 15. Most lenders will ask for it the moment it exists. On a conventional loan, your qualifying income is generally the average of your last two years of net income from your tax returns, after write-offs, with a few items added back (depreciation, depletion, amortization, and business use of home are the common ones). A strong 2025 return raises that average. A return that was optimized for the lowest possible tax bill lowers it, sometimes enough to change what you can buy.
The math cuts sharper than most people expect. Take an extra $20,000 of deductions on the 2025 return. That might save you $5,000 to $7,000 in tax. Averaged over 24 months, it also removes about $833 a month from your qualifying income. At a 45% debt-to-income limit, that is roughly $375 a month of payment capacity, which at today's posted rate is about $57,000 of loan amount you can no longer qualify for. If the lender is only using one year of returns, the same deduction costs about twice that. Nobody tells you this at tax time, and it is the single most common reason I see a self-employed buyer approved for less than they expected.
The payment picture this week
On a $500,000 loan, principal and interest only, 30-year term:
- At the 7.20% national average, the payment is about $3,394 a month.
- At 6.875%, the conventional rate posted today on my live rates page, it is about $3,285. That is about $109 a month, roughly $1,312 a year, from shopping the rate instead of taking the average.
- At 7.125%, the bank statement rate I am posting today, it is about $3,369. That is $84 a month above the conventional rate, and still $25 a month under the national average for a full-documentation loan.
Every eighth of a point on this loan is about $42 a month. Keep that number in mind for the next section, because a bank statement loan is a quarter point above conventional on my rate sheet, and for a lot of self-employed borrowers that quarter point buys a much bigger approval.
Three moves to make before October 15
1. Talk to your CPA before you file, not after. Ask for two versions of the return: the lowest-tax version and the version that shows the income you actually earned. Then run both past a loan officer. Sometimes the difference in tax is small and the difference in approval is a house. If you have already filed, you are not stuck; you just need to know what the number is and plan around it.
2. Get priced two ways: full documentation and bank statement. A bank statement loan uses 12 or 24 months of business or personal deposits to establish income, with an expense factor applied, and ignores the tax return entirely. Rates run higher, currently 7.125% on my sheet versus 6.875% conventional, and down payments are typically 10% to 20%. For a borrower whose deposits are strong but whose Schedule C is thin, it is often the only loan that works at the price point they want. For a borrower with clean returns, conventional wins on cost. I price both and show you the gap.
3. Investors: qualify on the property, not the return. If the purchase is a rental, a DSCR loan qualifies on the property's rent against its payment and does not look at your personal income at all. I am posting 7.625% on DSCR today. It is more expensive than a conventional investment loan, but it does not care what your 2025 return says, and it does not use up your conventional loan slots.
Self-employed and buying this fall?
Send me your last two years of returns, or 12 months of bank statements if you would rather start there, plus your price range and down payment. I will price conventional and bank statement side by side and tell you which return version to file. No credit pull, no pressure, usually same day.
Lock or float after a Fed week
With the meeting behind us, the immediate event risk is gone, but rates are within a few hundredths of the 52-week high and the market is still adjusting to a Fed that is talking about more hikes rather than cuts. My standing rule has not changed: if you are closing inside 30 days, lock, and if you are 60 days or more out, ask what a float-down costs so you can lock now and still take a lower rate once if the market improves. Floating a purchase loan to try to catch a dip is a bet with your contract deadline on the line, and I do not recommend it. The event-risk framework I laid out before Jackson Hole still applies.
If you already own
Nothing about this week changes the answer for homeowners with a rate in the 2s, 3s, or 4s: leave that first mortgage alone, and if you need cash, price a second mortgage before you price a cash-out refinance; the math is here. If you bought in late 2023 or 2024 above 7.5%, today's posted rate is still below what you have, and a rate-and-term refinance may pencil once closing costs are weighed against the savings. Run it on my refinance calculator and join the rate alert list so you hear about it when the market moves enough to matter.
What is on the calendar this week
A lighter week for data after the Fed. New home sales and a parade of Fed speakers will fill the middle of the week, and the August PCE inflation report, the Fed's preferred inflation gauge, lands at the end of it. Freddie Mac's survey comes Thursday morning. The daily index updates every weekday afternoon, and I update the posted rate on my rates page every morning from it.
The bottom line
The Fed raised rates a quarter point, and the 30-year fixed ended the week at 7.20%, right where it was before the announcement. On a $500,000 loan, the gap between the national average and what I am posting today is about $109 a month. If you are self-employed, the thing most likely to change your approval in the next month is not the Fed, it is the 2025 return you file by October 15. Talk to your CPA before you file, get priced full-doc and bank statement side by side, and use DSCR for rentals. If you want a straight answer on your situation, my phone number is at the top of the page and I answer it personally.