Self-employed · Florida
1099 loans
Contractors are paid well and taxed as though they are not. The 1099 shows the gross. The return shows what was left after every deduction a good preparer could find. A 1099 loan reads the first document and ignores the second.
How does a 1099 mortgage work?
A 1099 loan qualifies an independent contractor on the gross income shown on one or two years of 1099 forms, less a fixed expense factor — commonly 10 percent — instead of the net income on Schedule C. No tax returns are needed. Lenders generally require the 1099 income to come from the same source or field for the period used.
The arithmetic
Total the 1099s for the period, subtract the expense factor, divide by the months. Two years of forms usually prices better than one and may allow a lower expense factor. The lender will normally ask for recent bank statements or a year-to-date check to confirm the income is continuing.
Who uses it
Real estate agents, drivers, delivery and platform workers, freelance professionals, and anyone paid by 1099-NEC or 1099-MISC whose deductions make the return unusable for a conventional loan.
Next step
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Straight answers
Frequently asked
Can I get a mortgage with just 1099 forms?
Yes. A 1099 loan qualifies you on the gross income shown on one or two years of 1099 forms, minus a fixed expense factor, in place of tax returns. It is designed for independent contractors and gig workers whose Schedule C deductions leave too little net income for a conventional loan.
What expense factor do lenders use on a 1099 loan?
Commonly 10 percent of gross 1099 income, though it varies by lender and some apply a higher factor for certain occupations. A two-year history sometimes earns a lower factor than a single year.
Is a 1099 loan the same as a bank statement loan?
No. A 1099 loan reads the income reported on your 1099 forms; a bank statement loan reads deposits into your accounts. If most of your income arrives on 1099s from a stable source, the 1099 loan is simpler. If it arrives from many small clients or in cash, bank statements usually work better.
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