1099 loans · Independent contractors
Paid on a 1099? Qualify on what you earned, not what you wrote off.
A 1099 loan qualifies independent contractors and commission earners on the income reported on their 1099s, not the much smaller net income left on their tax return after write-offs. Many programs count 90% of your 1099 income. We typically close Non-QM loans in about 12 days.
The calculation
How do 1099 loans calculate income?
The lender totals 12 or 24 months of 1099 income, applies a flat expense factor (commonly 10%), and uses the result as your qualifying income. Your Schedule C write-offs are not subtracted.
| Same contractor, two ways | Annual income counted |
|---|---|
| 1099 income received | $180,000 |
| Net income on the tax return after write-offs | $95,000 |
| Tax-return loan counts | $95,000 ($7,917 / mo) |
| 1099 loan counts (90% of $180,000) | $162,000 ($13,500 / mo) |
Illustration only. Some programs use a preparer-provided expense ratio instead of a flat 10%.
That extra $5,583 a month of qualifying income can support a much larger payment at the same debt-to-income ratio.
What you’ll need
What documents does a 1099 loan require?
- 1099s for 12 or 24 months, depending on the program.
- Year-to-date proof that the income is continuing: recent statements, pay summaries or bank statements.
- Two years in the same line of work at most lenders.
- Credit, assets and reserves as with any loan. Many programs start around 620 credit and allow up to 85–90% loan-to-value.
- No tax returns for the income calculation on most programs.
- A written verification from the payer in some cases.
Choosing a program
1099 loan or bank statement loan?
| 1099 loan | Bank statement loan | |
|---|---|---|
| Income source | 1099 forms from the companies that pay you | Deposits into your business or personal accounts |
| Expense deduction | Flat, often 10% | 50% standard, lower for lean service businesses |
| Best when | Most income comes from a few payers that issue 1099s | Income comes from many clients, cash or card sales |
| Paperwork | A few forms plus year-to-date proof | 12 or 24 months of statements |
Real estate agents, loan officers, consultants and other 1099 earners often qualify for more with a 1099 loan. We calculate both before you choose. See bank statement and P&L loans.
Common questions
1099 loan FAQ
What is a 1099 loan?
A 1099 loan is a Non-QM mortgage that qualifies independent contractors on the income shown on their 1099 forms, typically less a flat 10% expense factor, instead of the net income on their tax return.
Can I get a mortgage with only 1099 income?
Yes. 1099 loan programs are built for borrowers whose income is reported entirely on 1099s, such as contractors, real estate agents and commission-only salespeople.
How many years of 1099s do I need?
Programs ask for 12 or 24 months of 1099s. Most also want about two years in the same line of work.
Do I need tax returns for a 1099 loan?
Usually not for the income calculation. The lender uses your 1099s and year-to-date proof of income instead.
Are real estate agents eligible for 1099 loans?
Yes. Agents paid on a 1099 are a common fit, as are loan officers and other commission earners.
What credit score do I need?
Many programs start around 620, with better pricing and higher loan-to-value limits from about 680 and up.
Find out what you qualify for
Get your options, usually the same day
Tell Justin how you earn your income or what the property rents for, and you’ll get the programs you qualify for, the documents each one needs, and a realistic price range. No credit pull to start.
Franklin Direct is a mortgage lender in Ladera Ranch, California, powered by Franklin Loan Center. Our team specializes in Non-QM, self-employed and investor loans, and we typically close Non-QM loans in about 12 days.
Three ways to start
Apply now, or email or text Justin directly — usually answered the same day.