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).
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.
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.
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
Credit Score
Minimum score varies by lender, but typically:
620+ for most programs
660+ or higher for better rates or lower down payment options
Down Payment
Required down payments generally range from 10% to 20%, depending on:
Credit score
Loan size
Occupancy (primary, second home, or investment)
Assets / Reserves
Borrowers may need to show reserves (savings or investment accounts) covering 3–12 months of housing payments.
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.
Completed Mortgage Application
A standard mortgage application (1003) must be completed and submitted along with the required documentation.
Valid ID and Proof of Residency
Government-issued ID
Social Security number or ITIN
Proof of legal residency (if not a U.S. citizen)
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)
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.