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How to Get a Mortgage With 1099 Income

Written by Allison Martin

Allison Martin is a personal finance enthusiast and a passionate entrepreneur. With over a decade of experience, Allison has made a name for herself as a syndicated financial writer. Her articles are published in leading publications, like, Bankrate, The Wall Street Journal, MSN Money, and Investopedia. When she’s not busy creating content, Allison travels nationwide, sharing her knowledge and expertise in financial literacy and entrepreneurship through interactive workshops and programs. She also works as a Certified Financial Education Instructor (CFEI) dedicated to helping people from all walks of life achieve financial freedom and success.

Updated December 18, 2023​

3 min. read​

1099 mortgage

Are you a 1099 worker who’s in the market for a home loan? It’s possible to have fewer options than a salaried or hourly W-2 employee. Still, it’s possible to qualify for a mortgage if you know what to expect when you apply and prepare accordingly. In this guide, you’ll learn more about how the process works, along with a viable option to secure a home loan with a 1099 income.

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What Are 1099 Workers?

In short, these are individuals who are classified as non-employees. They generally work as independent contractors, seasonal workers, vendors or freelancers. Gig workers and individuals who complete side jobs are also considered non-employees. Regardless of the type of work that’s done, the earnings should be deemed as “ongoing” by the lender to qualify for consideration during the mortgage application process.

Can 1099 Workers Qualify for a Mortgage?

Yes. However, it’s not uncommon for 1099 workers to jump through a few more hurdles compared to W-2 employees since lenders consider your net income (or earnings after deductions) to determine your eligibility for a home loan.

What Is A 1099 Mortgage Loan?

A 1099 Income Loan is a flexible mortgage product offered by Angel Oak Mortgage Solutions. It caters to self-employed borrowers who are 1099 workers, including contractors, gig economy workers and freelancers who aren’t eligible for traditional mortgage products.

How Do 1099 Mortgage Loans Work?

Angel Oak Mortgage Solutions uses the income from 1099 earning statements to determine how much house you can afford. This means you won’t have to provide your tax returns to the lender when applying for a home loan.

Loan amounts between $150,000 and $3 million are available and can be used to purchase owner-occupied, non-owner occupied and second homes or refinance your existing loan. Furthermore, mortgage insurance isn’t required, which means you’ll save several thousand over the life of the loan.

How to Get a Mortgage With 1099 Income

Below, you’ll find additional guidance on what you’ll need to qualify for a 1099 Income Loan and how the requirements differ from what you’ll find with traditional loans.

1099 Income Documentation

Here’s a list of the income documentation you’ll need to provide:

  • 1099 statements from the past one or two years
  • Year-to-date earnings statement

If you decide to secure a traditional mortgage, you’ll also be asked to provide personal and business income tax returns from the past two years, a recent balance sheet and a year-to-date profit and loss statement.

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Other Proof of 1099 Income

Beyond 1099 forms, you should also be prepared to provide bank statements and paystubs.

Credit Score

You’ll need a minimum credit score of 600 to qualify for a 1099 Income Loan. This amount drops to 580 for FHA, but it’s slightly higher at 620 for conventional loans.

Credit History

Past credit challenges aren’t necessarily a deal-breaker. However, any bankruptcies, deed-in-lieu, foreclosures and short sales must be at least two years old to qualify for a loan. Traditional lenders often have more stringent seasoning requirements.

Loan-to-value Ratio

With Angel Oak Mortgage Solutions, the loan-to-value (LTV) ratio is capped at 80 percent if your credit score is between 640 and 699. Borrowers with credit scores of 700 or higher are given a maximum LTV of 90 percent. Traditional lenders often have more lenient LTV requirements, so you’ll have to reach out to confirm.

Where To Get a 1099 Mortgage Loan

Instead of spending hours scouring the web or calling every bank you can think of, inquire with Angel Oak Mortgage Solutions about the 1099 Income Loan. As mentioned earlier, you can use your 1099 statements to qualify for a mortgage of between $150,000 and $3 million. This alleviates the stress that comes with not having enough eligible income listed on your tax return to qualify for a mortgage.

Here are some additional requirements:

  • Proof of one- or two-years of 1099 earnings from bank statements, pay stubs or year-to-date earnings statements
  • Two or more years of self-employment with the same client
  • Maximum loan-to-value (LTV) of 90 percent if your credit score is at least 700 (or 80 percent if it’s between 640 and 699)
  • Two years of seasoning for bankruptcy, foreclosure, deed-in-lieu or short sale

If this loan doesn’t seem like a good fit, there are other options available if you’re self-employed. Angel Oak Mortgage Solutions also caters to homebuyers who are less than prime, individuals with significant assets looking to buy higher-value properties, those who prefer a lower down payment, active and retired service members and their spouses, and real estate investors, foreign nationals and first-time homebuyers.

Enquire today using the online form to speak with an advisor, acquire more information about loan products or get a quote.

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