1099 Mortgage Loans
Qualify on your 1099 income, not your tax return. A 1099 mortgage uses the income on your 1099 forms with an expense factor applied, instead of the net income left after write-offs. You do not need to own a business. You need to be paid on a 1099.
Who is a 1099 mortgage for?
Anyone who receives a 1099 instead of a W-2 and takes deductions against it:
- Real estate agents
- Insurance agents
- Truck drivers
- Contractors and trades
- Consultants
- Sales reps on commission
- Gig workers with consistent 1099 income
The pattern is always the same. Your 1099s show one number. Your tax return shows a much smaller number after expenses. A conventional lender only ever sees the second one.
How does the math work?
The lender takes your gross 1099 income and applies an expense factor, commonly somewhere in the range of 10% to 25% depending on the program and your profession. What is left is your qualifying income.
Some lenders use one year of 1099s. Some require two. One-year programs generally come with stricter credit or down payment requirements, because the lender has less history to look at.
What documents do you need?
- One or two years of 1099 forms
- Recent bank statements, usually two months
- A government-issued photo ID
- Sometimes a year-to-date income statement from whoever pays you
Notably absent from that list: tax returns. Most 1099 programs do not ask for them.
Why run a 1099 loan through a broker?
The exact expense factor and the exact documentation vary lender to lender, and that variation is the whole reason to run this through a broker. We are not locked into one guideline set.
These are Non-QM loans. They price differently than conventional, and that is the trade you are making for an approval based on what you actually earn rather than what is left after deductions.
1099 mortgage questions
What is a 1099 mortgage?
A 1099 mortgage qualifies you using the income reported on your 1099 forms, with a fixed expense factor applied, instead of the net income on your tax return. For an independent contractor with real business expenses, it usually produces a higher qualifying income than a conventional loan would.
Who qualifies for a 1099 loan?
Anyone paid on a 1099 rather than a W-2 who takes deductions against that income. Common examples include real estate agents, insurance agents, truck drivers, contractors and trades, consultants, commission sales reps, and gig workers with consistent 1099 income. You do not need to own a business.
How is income calculated on a 1099 loan?
The lender takes gross 1099 income and applies an expense factor, commonly in the range of 10 percent to 25 percent depending on the program and the profession. The remainder is the qualifying income. Some lenders use one year of 1099s and some require two, with one-year programs generally carrying stricter credit or down payment requirements.
Do you need tax returns for a 1099 mortgage?
Most 1099 programs do not require tax returns. The typical documentation is one or two years of 1099 forms, about two months of recent bank statements, a photo ID, and sometimes a year-to-date income statement from the payer.
Is a 1099 loan better than a bank statement loan?
If your income arrives as 1099s, a 1099 program is usually simpler and often produces a higher qualifying income, because there is no averaging of deposits and no question about which deposits count. If income comes into a business account from many sources that 1099s do not capture, a bank statement program is usually the better fit.
Best fit if…
- ✓You are paid on 1099s instead of a W-2
- ✓Your tax return shows much less than your 1099s after write-offs
- ✓You are newly on 1099 income
- ✓Your tax returns are on extension
- ✓You want to qualify without tax returns
- ✓A conventional lender only sees your net income
Spring Home Company, independent mortgage broker in Toms River, New Jersey. Licensed in New Jersey, Pennsylvania and Texas. NMLS #2741914. Sam Alpert, President and Mortgage Loan Originator, NMLS #1961555. 732-908-8040.
Informational only. Not a commitment to lend or a rate quote. Program terms and availability vary by lender and change without notice.