How it works
The lender takes the gross figure from your 1099 forms and applies a modest expense factor, typically 10% to 20%, to arrive at qualifying income. Far simpler than parsing deposits, and it often produces a higher qualifying income than a bank statement analysis would.
An independent contractor receives substantial 1099 income but has relatively simple business expenses. A 1099-based program may calculate qualifying income from the 1099 history using the lender’s method instead of a full tax-return analysis.
Who it can work well for
Real estate agents, insurance producers, sales professionals, medical contractors, and independent consultants — anyone paid on a 1099 rather than a W-2.
What lenders actually look at
The lender examines 1099 history, continuity of the income source, year-to-date earnings or verification as required, credit, assets and the borrower’s overall profile.
Illustrative lender guidelines
These are educational examples, not universal approval rules. Exact requirements and maximum leverage vary by lender and complete scenario.
| Scenario | Credit / qualifier | Illustrative leverage |
|---|---|---|
| Primary residence | 720+ | 90% |
| Primary residence | 660-719 | 85% |
| Primary residence | 620-659 | 80% |
| Investment property | 680+ | 80% |
| Years of 1099s | — | 1 or 2 |
What to watch for
Only works if the overwhelming majority of your income is on 1099s. Mixed W-2 and 1099 income usually routes to a different program or full documentation.
Common misconception: gross 1099 income is always treated dollar-for-dollar as qualifying income. Programs may apply expense assumptions or other calculations.
When this may not be the best choice
It may not fit borrowers with complex businesses, large expenses, inconsistent 1099 history or those who qualify better with conventional or bank-statement documentation.
Common questions
Related programs
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