1099 Income Loan

What Is a 1099 Income Loan?
A 1099 income loan is a non-traditional mortgage option that helps self-employed workers who receive IRS Form 1099 instead of W-2s. It allows them to qualify for a mortgage without needing to provide full tax returns.

Key Highlights:

  • Designed for self-employed 1099 workers (freelancers, contractors, gig workers, etc.).

  • Borrowers can use 1099 forms instead of tax returns to verify income.

  • No need for W-2s, pay stubs, or full tax filings.

  • Ideal for borrowers who may not meet traditional Agency or QM guidelines.

  • Typically used for primary residences, second homes, or investment properties.

  • Flexible underwriting with competitive rates and common-sense documentation.

  • A great fit for Uber drivers, DoorDashers, real estate agents, consultants, and other independent contractors.

  • Usually requires a minimum credit score, down payment, and recent 1099s (1–2 years).

❌ What’s Not Needed for a 1099 Income Loan:

  • No Tax Returns
    Borrowers do not need to submit federal income tax returns (Form 1040), which are typically required in full-doc loans.

  • No W-2s or Pay Stubs
    Since borrowers are not traditionally employed, they are not required to show W-2 income or recent pay stubs.

  • No Profit & Loss Statements (in many cases)
    Some programs do not require a P&L statement or CPA-prepared financials unless combined with other alternative income methods.

  • No Employment Verification with an Employer
    No need to verify a job through a company or HR department—self-employment status is sufficient.

  • No Traditional Debt-to-Income (DTI) Calculation Based on Taxable Income
    Income is calculated using the gross amount shown on 1099s instead of adjusted income or taxable income.

  • No Agency Guideline Requirements
    These loans do not follow Fannie Mae/Freddie Mac standards, which typically make qualification harder for self-employed borrowers.

✅ What Is Needed for a 1099 Income Loan

  1. One or Two Years of 1099 Forms

    • Most lenders require the most recent 1–2 years of 1099s from all sources of self-employment income.

    • These documents replace tax returns as proof of income.

  2. Proof of Ongoing Self-Employment

    • This can include:

      • A business license (if applicable)

      • A professional website or social media presence

      • Invoices or contracts

      • A letter of explanation about the nature of your self-employment

      • Bank statements supporting consistent deposits

  3. Credit Score

    • Minimum score varies by lender, but typically:

      • 620+ for most programs

      • 660+ or higher for better rates or lower down payment options

  4. Down Payment

    • Required down payments generally range from 10% to 20%, depending on:

      • Credit score

      • Loan size

      • Occupancy (primary, second home, or investment)

  5. Assets / Reserves

    • Borrowers may need to show reserves (savings or investment accounts) covering 3–12 months of housing payments.

  6. Debt-to-Income (DTI) or Income Calculation Based on 1099 Totals

    • Lenders will typically average the total income shown on 1099s to determine your qualifying income.

  7. Completed Mortgage Application

    • A standard mortgage application (1003) must be completed and submitted along with the required documentation.

  8. Valid ID and Proof of Residency

    • Government-issued ID

    • Social Security number or ITIN

    • Proof of legal residency (if not a U.S. citizen)

Optional (Depending on Lender):

  • Bank Statements to support cash flow

  • CPA Letter verifying self-employment (some lenders may require this)

  • VOE (Verification of Employment) for contract roles (rarely, and only if part of income)

📌 1099 Income Loan Program – General Information

  • Designed for self-employed borrowers who receive 1099 forms instead of W-2s.

  • Ideal for freelancers, contractors, gig economy workers, real estate agents, and consultants.

  • Allows borrowers to qualify without tax returns or W-2s.

  • Borrowers use 1–2 years of 1099 income statements to verify income.

  • Great alternative for those who write off expenses and show limited income on tax returns.

  • Available for primary residences, second homes, and investment properties.

  • No traditional income documentation like pay stubs or full tax returns required.

  • Flexible underwriting with competitive rates and reasonable down payments (10–20%).

  • Typically requires a minimum credit score of 620–660+ depending on loan terms.

  • May require proof of self-employment (business license, invoices, or professional website).

  • Income is calculated by averaging gross 1099 income over 12–24 months.

  • Reserves (savings) may be required depending on the loan size and occupancy type.

  • Can be used for purchase, refinance, or cash-out transactions.

  • Part of the Non-QM (Non-Qualified Mortgage) loan family — does not follow Fannie Mae/Freddie Mac rules.

  • Helps underserved self-employed borrowers who don’t fit traditional loan programs.

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