1099 mortgage loans are built for independent contractors, gig workers, and commission earners who are paid on 1099s rather than a W-2. Instead of qualifying on your tax returns, which often understate your income after deductions, a 1099 loan qualifies you on your 1099 income directly. For the millions of Californians earning this way, it can be the cleanest path to a mortgage that reflects what they actually make.
This is a focused look at 1099 loans. For the broader picture of self-employed financing, see our self-employed mortgage guide, and for the closely related deposit-based option, our bank statement loans page.
A 1099 mortgage loan is a program that qualifies you using the income reported on your 1099 forms, typically over one or two years. Rather than digging through tax returns and the deductions that lower your taxable income, the lender starts from your gross 1099 income and applies a modest expense factor to estimate your qualifying income. Because that expense factor is often smaller than the deductions you take on your taxes, your qualifying income on a 1099 loan can be meaningfully higher than what your tax returns show. It's a specialized program, part of the non-qualified mortgage family, designed for a specific and growing kind of earner.
If your income arrives on a 1099, this program is worth a look. That includes independent contractors across every field, gig-economy workers like rideshare and delivery drivers, commission-based earners such as real estate agents, insurance agents, and sales professionals, freelancers, consultants, and traveling or contract professionals. What these earners share is income that's well documented on 1099s but often reduced on their tax returns by legitimate business write-offs. A 1099 loan lets that documented income speak for itself, which is exactly what many contractors need to qualify for the home they can actually afford.
The mechanics are straightforward. The lender collects your 1099 forms, usually for one or two years depending on the program, and totals your gross 1099 income. They then apply an expense factor, a percentage subtracted to account for your business costs, and the remainder becomes your qualifying income. Some programs use a set expense percentage, while others may adjust it based on your profession or a CPA statement. Many programs also want to see year-to-date income proof, like recent pay documentation or bank statements, to confirm your income is continuing at a similar pace. The result is a qualifying income figure grounded in your 1099s rather than your written-down taxable income.
Both programs serve self-employed borrowers, and choosing between them comes down to how your income is documented. A 1099 loan uses your 1099 forms directly, which is ideal if your income arrives cleanly on 1099s, like a contractor or commissioned agent whose payers issue them. A bank statement loan uses your bank deposits, which fits business owners whose revenue flows through their accounts but isn't neatly captured on 1099s. If you receive 1099s, the 1099 loan is often simpler, since your income is already summarized on those forms. If your income is more varied or comes without 1099s, bank statements may present it better. We compare both for you, because the right one depends on which documents show your income most favorably and accurately.
A simple illustration shows the difference. Imagine a contractor whose 1099s total $100,000 in gross income for the year. After legitimate business write-offs, their tax return might show net income of, say, $60,000, which is what a traditional lender would use. A 1099 loan, by contrast, starts from the $100,000 gross and subtracts only a modest expense factor, so if that factor were 10 percent, the qualifying income would be around $90,000. That's a large difference in qualifying income, which translates into a meaningfully larger loan, all from the same actual earnings. These numbers are illustrative and the expense factor varies by program, but the mechanism is real: by using gross 1099 income with a small adjustment rather than your written-down net, a 1099 loan can qualify you for far more house than your tax returns suggest.
The contrast with a traditional loan is the whole reason 1099 loans exist. A traditional loan uses your net income after all the deductions on your Schedule C, which can be far lower than your gross earnings if you write off aggressively. A 1099 loan starts from your gross 1099 income and subtracts only a modest expense factor, so your qualifying income is usually higher. If your tax returns show enough income to qualify traditionally, that route may carry a better rate and is worth checking first. But when write-offs have shrunk your taxable income below what you need, a 1099 loan bridges the gap by using your real earning power.
The requirements are built around your 1099 income, with standard qualifications around it. You'll generally need one to two years of 1099s, with two years being common and some programs accepting one year with strength. Lenders look for continuity in your line of work, so a consistent field and income history helps. On credit, minimums vary by program, generally in the low-to-mid 600s and up, with better pricing at higher scores. The down payment is commonly in the range of 10 to 20 percent or more, depending on your credit and the property. Most programs require cash reserves after closing, often several months of the new payment. And your debt-to-income ratio, calculated on your qualifying income, needs to fall within the program's limit. Meeting these makes a 1099 loan a smooth path.
The documentation is refreshingly light for the right borrower. Expect to provide your 1099 forms for the required period, year-to-date proof that your income is continuing, such as recent income documentation or bank statements, and asset statements documenting your funds for the down payment and reserves. You'll verify your identity and the property details. What you generally won't need is full tax returns, W-2s, or employer pay stubs, which is the point of the program. If a lender wants a CPA statement to support an expense figure, we'll let you know in advance so you can have it ready.
Many borrowers don't fit a single box, and 1099 programs can often accommodate that. If you earn 1099 income plus a W-2 job, or 1099 income alongside rental or investment income, some lenders will blend the sources to build your full qualifying picture. A dual earner household where one spouse is W-2 and the other is a 1099 contractor is common, and the right program can use both incomes. The details depend on the lender and how each income is documented, but the point is that your 1099 income doesn't have to stand alone. We look at your whole income picture and find the program that counts the most of it.
The program works for refinancing, not just buying. A contractor or commissioned earner who already owns a home can refinance with a 1099 loan to lower a rate, change the loan, or take cash out, qualifying the same way, on 1099 income rather than tax returns. Self-employed homeowners often assume a refinance requires the tax returns that hold them back, when a 1099 refinance would qualify them on their real earnings. If you own a home and are paid on 1099s, the same path that helps buyers is available to you.
A little preparation smooths the process. Keep your 1099 forms organized and accessible for the past two years. Maintain proof of your current income, since lenders want year-to-date evidence that your earnings are continuing. Avoid gaps in your work history where possible, because continuity strengthens your file. Keep your credit in good shape, since it affects both approval and pricing. And gather your asset statements for the down payment and reserves. Being organized lets us move quickly and match you to the strongest program, turning a potentially complex file into a straightforward approval.
1099 loans are flexible on property and occupancy. They can finance a primary residence, a second home, or an investment property, with terms adjusting by occupancy. Eligible property types include single-family homes, warrantable condos and townhomes, and often 2 to 4 unit properties. Loan amounts range from modest loans up into jumbo territory, and in California's higher-priced markets, 1099 jumbo programs let contractors and commissioned earners finance expensive homes without traditional income documentation. Each lender sets its own range, which we confirm fits your purchase.
Because California prices push many buyers into jumbo territory, 1099 jumbo programs matter here. They let contractors and commissioned earners finance high-value homes using 1099 income, without traditional tax returns. As with any jumbo, the surrounding requirements tighten, expect a stronger credit score, a larger down payment, and more reserves given the loan size, while the income still comes from your 1099s. This is a well-established path for high-earning contractors, real estate agents, and sales professionals buying in California's coastal and metro markets. If your 1099 income supports a large loan, a 1099 jumbo can get you into a home your tax returns alone might not.
Pros. Qualifies on your 1099 income rather than your written-down tax returns, often producing a higher qualifying income. Lighter documentation than a traditional loan, with no tax returns required. Works for primary, second, and investment properties. Available up to jumbo amounts. Ideal for contractors and commissioned earners whose income is cleanly on 1099s.
Cons. Often a slightly higher rate than a fully documented conventional loan, since it's a non-QM program. A larger down payment than some low-down options. And it requires that your income actually arrive on 1099s, so a business owner without them may be better served by a bank statement loan. As always, if you qualify traditionally, that route may be cheaper, and we'll check.
Here's what to have ready: one to two years of 1099 forms showing your income; continuity in your line of work; a qualifying credit score; a down payment generally in the 10 to 20 percent range; several months of reserves after closing; year-to-date proof that your income is continuing; and asset documentation for your funds, but no tax returns. Meet these, and a 1099 loan qualifies you on the income you truly earn rather than the income your tax returns show.
What is a 1099 mortgage loan? A 1099 mortgage loan qualifies you using the income on your 1099 forms rather than your tax returns. The lender starts from your gross 1099 income, applies a modest expense factor, and uses the result as your qualifying income.
Who qualifies for a 1099 loan? Independent contractors, gig workers, commission earners like real estate and insurance agents, freelancers, and consultants, anyone whose income is documented on 1099s but reduced on their tax returns by write-offs.
How many years of 1099s do I need? Usually one to two years, with two being common and some programs accepting one year with compensating strength. Continuity in your line of work helps.
What is the difference between a 1099 loan and a bank statement loan? A 1099 loan uses your 1099 forms directly, which is simpler if your income arrives on 1099s. A bank statement loan uses your bank deposits, which fits business owners whose revenue isn't captured on 1099s. We compare both for you.
Do 1099 loans require tax returns? No. You qualify on your 1099 income plus year-to-date proof and asset documentation, without full tax returns, W-2s, or pay stubs.
What credit score do I need for a 1099 loan? Minimums vary by program, generally in the low-to-mid 600s and up, with better pricing at higher scores. A stronger score can offset a smaller down payment in some programs.
How much down payment does a 1099 loan require? Commonly 10 to 20 percent or more, depending on your credit and the property. Gift funds are often allowed on a primary residence.
Can I use a 1099 loan for an investment property? Yes. 1099 loans can finance primary homes, second homes, and investment properties, with terms adjusting by occupancy.
Can I combine 1099 income with W-2 or other income? Often yes. Some lenders blend 1099 income with a W-2 job or rental income to build your full qualifying picture, which helps dual-income households and borrowers with multiple income sources. We find the program that counts the most of your income.
The choice between a 1099 loan, a bank statement loan, and a traditional loan depends on how your income is documented, and getting it right is where a broker adds value. We compare all three across many lenders and match you to the program that reflects your income most accurately and prices it best. Our self-employed mortgage guide covers the full menu, and our bank statement loans page covers the deposit-based option.
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If you're paid on 1099s and buying or refinancing anywhere in California, contact Save Financial. Call our Newport Beach office at (949) 379-5320 or request a quote to get started, and we'll take it from there.
Loan programs, income calculation methods, rates, and terms vary by lender and program and are subject to change. Qualification depends on borrower qualifications and lender approval. Save Financial is a California-licensed mortgage brokerage (NMLS #377740, DRE #01875766). Equal Housing Opportunity.
Save Financial is a California-licensed mortgage brokerage (NMLS #377740, DRE #01875766) with offices in Newport Beach and Marina del Rey. Call (888) 703-1840 or request your free rate quote. Rates and terms are subject to change and depend on borrower qualifications and lender approval. Equal Housing Opportunity.