By Matt Allen
Vice President, Portfolio Lending (NMLS #415037)

How To Get a Mortgage With 1099 Income

Aug 17, 2023

  • 1099 Mortgage Loan
  • Non-QM Loans

The employee landscape has changed considerably over the last few years, with a dramatic increase in those classified as independent contractors or “gig workers.” According to Statista, the number of independent workers in the U.S. increased from 15.8 million in 2020 to 31.9 million in 2022. While the gig economy allows workers to set their hours, work from home, and be their own bosses, it does cause some challenges when trying to purchase a house.

Lenders require proof of employment to qualify for a conventional loan, such as a W2. Securing a home loan can be tricky since gig workers usually receive 1099s, not W2s. One solution is a particular mortgage loan called a 1099 loan.

Instead of using tax documents to qualify, borrowers can use their 1099 earning statements to show work income. Qualifications for a 1099 mortgage loan include:

  • The last six to twelve months of 1099 income; less if the 1099 income is from the most recent employer
  • Documentation of year-to-date income
  • 680 minimum credit score
  • Minimum 15% down with mortgage insurance approval

As with any home loan preparation, you want to put yourself in the best position to be approved for a 1099 mortgage loan. Some things you should do before applying include:

  • Get pre-approved for your mortgage to show you how much you can afford.
  • Pay down as much debt as possible to improve your credit score.
  • Lower your debt-to-income ratio to 43% or less.
  • Save for as much down payment as possible – at least 10%.
  • Maintain clean, easy-to-follow business records.
  • Find a lender who has experience with non-QM mortgage loans.

If you are a gig worker and want to find out how to qualify for a 1099 loan, give the non-QM loan experts at NASB at 855-921-4821 or click here for more information.