Loan types
1099 Income Mortgage
A 1099 income mortgage is a non-QM product built for independent contractors and gig-economy workers, qualifying income from 1099 forms rather than the two-year self-employment tax return averaging conventional loans require.
Contractors, freelancers, and commissioned or gig-economy workers are paid on a 1099 rather than a W-2, which puts them in an awkward middle ground: not employees in the conventional-loan sense, but often without the layered business structure a bank statement or P&L product is built around. A 1099 income mortgage documents this income directly.
What it is
A non-QM product that qualifies income primarily from 1099 forms over a defined lookback period, rather than requiring the two years of tax returns and averaging a conventional loan applies to self-employment and commission income.
Who qualifies
Independent contractors, freelancers, real estate and insurance agents, consultants, and gig-economy workers whose income is reported on 1099s rather than a W-2, and who may not have the layered business accounting a bank statement or P&L product assumes.
How income is calculated
1099 forms over the lookback period establish gross income; because 1099 income does not come with the net figures a W-2 provides, lenders typically apply a standard expense factor or otherwise adjust the gross figure down to a usable qualifying income, sometimes supplemented by recent statements or year-to-date documentation.
How it differs from a DSCR loan
This product still measures the borrower’s own income capacity. A
DSCR loan instead measures whether the subject property’s rent covers its own payment, with no borrower income document — 1099, W-2, or otherwise — involved in the qualification decision.
Where it overlaps with other non-QM products
A 1099 worker with a more developed business structure may qualify equally well, or better, through a
bank statement loan or a
P&L only mortgage. Which documentation path produces the strongest qualifying income depends on the specific income pattern.
Frequently asked
What counts as 1099 income?
Income reported to a worker on Form 1099 rather than a W-2 — typical of contractors, freelancers, commissioned agents, and gig-economy work.
How many years of 1099s are typically required?
Lookback periods vary by lender. Confirm the specific requirement with the lender rather than assuming a standard.
Is 1099 income treated the same as W-2 income?
No. Because 1099 income has no employer-side withholding or net-pay figure, lenders typically apply an expense adjustment to arrive at a usable qualifying number.
Can 1099 income mortgages be used on a rental property?
Some lenders allow it, but an investor buying a rental purely for its own cash flow more commonly uses a DSCR loan, which does not require any personal income documentation at all.
How is this different from a bank statement loan?
A 1099 income mortgage starts from the 1099 forms themselves. A bank statement loan starts from deposit activity in the borrower’s accounts. Both are alternatives to full self-employment tax return documentation.
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