1099 Mortgage Loans

A 1099 income loan is designed for the unique lending needs of self-employed or independent contract workers. Workers with unconvetional income stream may find it difficult to qualify for a conventional mortgage loan. A 1099 mortgage loan looks at a borrower's 1099 forms to verify their income instead of tax returns.

What is form 1099?

Form 1099 is one of several IRS tax forms (see the variants section) used in the United States to prepare and file an information return to report various types of income other than wages, salaries, and tips (for which Form W-2 is used instead). The form is used to report payments to independent contractors, rental property income, income from interest and dividends, sales proceeds, and other miscellaneous income recipients to tax professionals. This has led to the phrases "1099 workers" and "the 1099 economy" to refer to those whose income is reported on Form 1099, in contrast to a "W-2 employee" who receives Form W-2." - Wikipedia

Is it harder to get approved for a mortgage with 1099 income?

Technically yes, it is more difficult to qualify for a mortgage as a 1099 (self-employed/independent) worker than as a W2 (salaried) employee. However, if you have been an independent contractor for atleast two years with steady income, and you can provide the proof on paper, it should give the comfort level the lenders need. Lenders mostly want to see at least a 2 year history in tax returns. Some lenders may want a profit and loss statement for your current year as a further proof of financial stability.

Who should consider a 1099 mortgage?

• Independent contractors
• A freelancers
• Independent consultants
• Business owners with irregular income stream
• Sole proprietors
• Other self-employed individuals receive 1099s when they complete work for a business

Salient features of 1099 mortgage loan program

• No tax returns or bank statements required
• All occupancy types (primary residences, second homes, and investment properties)
• Fixed and adjustable rate mortgages
• More flexible LTV ratios compared to conventional mortgages, with maximum LTVs often ranging from 75% to 90%
• Mortgage insurance not required
• Funds can be in checking, savings, money market accounts, marketable securities, or retirement accounts
• More lenient in terms of credit requirements compared to traditional mortgages

Our Non-QM 1099 mortgage loan program is an excellent solution for those who use form 1099 to file an information return to report various types of income other than wages, salaries, and tips. At Premium Mortgage Demo, we specialize in Conventional and Non-QM loans and have extensive experience in 1099 mortgage loans.

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