Purchase Loans
1099 loans are built for borrowers whose income shows up on 1099 forms rather than W-2s — independent contractors, commission-only sales professionals, gig workers, freelancers, and real estate agents. The problem these loans solve is simple: conventional mortgage underwriting applies a 2-year average to self-employment income and can penalize lumpy or growing earnings, while 1099-specific programs evaluate your direct 1099 earnings as qualifying income with more flexibility. Some programs average 1 year, not 2. Some accept 1099 income in a mixed doc scenario where part of the file is W-2. The tradeoff is a rate premium of roughly 0.5–1.0% over conventional, but for contractors who’ve grown revenue year-over-year or who have limited W-2 backup, 1099 loans often qualify borrowers that conventional rejects or underquotes.
Rather than requiring pay stubs and W-2s, these programs evaluate your 1099 earnings history to determine qualifying income.
Lenders typically want 1–2 years of 1099 history — some programs accept 1 year of 1099s for borrowers with stable prior employment in the same field.
Year-over-year growth in 1099 earnings can strengthen your case; declining income may lead the underwriter to use the lower number.
Down payments typically start at 10% for primary residences, 15–25% for second homes and investment.
Most programs require credit scores of 620+, with best pricing at 700+, and reserves of 3–6 months PITI.
Some 1099 programs allow mixed documentation — 1099 income on one borrower paired with W-2 income on a co-borrower for blended qualifying.
Commission income totaled $140k last year, $165k the prior year. Averaging to $152,500 in qualifying income. Conventional would also qualify this file, but 1099 programs often allow a 1-year look-back for borrowers with prior stable W-2 employment in real estate.
Locum tenens physicians, dentists, and specialty healthcare contractors often earn via 1099. Their income is typically high and stable, but the 2-year conventional averaging can hurt growing contractors. 1099 programs evaluate trend more favorably.
Variable commission income with lumpy payment timing. 1099 programs average across 12–24 months and smooth out month-to-month variability that would fail conventional DTI calculations.
Independent engineer or designer with 1–2 active clients paying on 1099. Fast-growing income with recent full-time-to-contract transition. 1099 programs accept the pivot more readily than conventional.
YouTube, Twitch, Substack, or platform-based creator earning via 1099-NEC or 1099-K. As long as income is documented and stable, 1099 programs can qualify borrowers that have no W-2 history at all.
1099 earnings $135k (year 1) and $155k (year 2) → $145k qualifying income. Loan $340,000 at a 7.25% rate. Monthly P&I about $2,319. Total PITI near $2,950 after taxes and insurance.
Borrower transitioned from W-2 to 1099 in the same field 14 months ago, earning $180k in the first year. Some 1099 programs allow 1-year look-back with prior stable W-2 employment. Loan $400,000 at 7.5%. Monthly P&I about $2,797.
Homeowner with $250k in equity and rapidly growing 1099 income. Conventional would average down to the lower year; 1099 program uses trending income. Enables a $150k cash-out that wouldn’t have been approvable on tax-return income alone.
Example figures use illustrative rates and are for educational purposes only. Actual rates, terms, and costs depend on credit profile, market conditions, and property specifics.
Conventional averages tax returns across 2 years and can penalize lumpy or growing income. 1099 programs evaluate 1099s directly and often handle income trend more favorably. The cost is a 0.5–1.0% rate premium.
Bank statement qualifies off deposits — best when income flows through a business account or doesn’t map cleanly to 1099s. 1099 programs are simpler and cheaper when clean 1099 records exist.
FHA has lower down payment requirements (3.5%) and lower credit minimums (580) but requires 2 years of tax returns for self-employed borrowers. 1099 programs are usually better for contractors whose tax returns don’t tell the full story.
Asset depletion uses liquid investment assets as qualifying income — useful for borrowers with large investment balances but limited current earnings. 1099 works for active earners; asset depletion works for semi-retired or high-net-worth borrowers.
Explore the programs 1099 mortgage loans for self-employed are most often compared against, plus the Purchase Loans hub for the full lineup and today's mortgage rates for current pricing context.
Freelancers, independent contractors, and commission earners who file 1099s and can’t easily document income through traditional pay stubs or W-2s.
Most programs want to see at least one to two years of consistent 1099 earnings. The stronger and more stable your history, the better your position.
Yes. 1099 income documentation can be used for refinances — both rate-term and cash-out — not just purchases.
Yes, for borrowers with prior stable W-2 employment in the same field. If you transitioned from a W-2 role as a software engineer to an independent contract software engineer 14 months ago, you may qualify under a 1-year program. The exact guideline varies by lender.
Declining 1099 income typically means the lender uses the most recent (lower) year as qualifying, not the average. If the decline is small and explainable, some programs will still allow averaging with documentation.
Yes, most programs require a year-to-date earnings statement (via the payer’s summary or bank deposits) to confirm your current year is trending consistent with prior years.
Yes, many 1099 programs allow mixed documentation. Your 1099 income is calculated using the 1099 program’s method, your spouse’s W-2 income follows standard conventional rules, and the combined qualifying income supports the loan.
Yes, as long as you receive 1099-NEC or 1099-K documentation from the platform (Uber, DoorDash, Substack, YouTube AdSense, etc.) and the earnings history is consistent. Most programs require 1–2 years of the gig income.
Typically 0.5–1.0% higher than conventional rates, depending on credit score, down payment, and program. The premium is usually worth it when conventional would decline or dramatically underquote the qualifying income.
Most 1099 programs go up to the jumbo threshold and beyond — $1M+ is common, and select jumbo 1099 programs reach $2–3M for high-income contractors.
Contractors and commission earners often qualify for more than they expect — use the affordability calculator with your 1099 earnings history to see the true range. Then estimate your monthly payment in the mortgage calculator to build a realistic budget around the loan.