Loan Options
Qualify on your 1099 income, not a stack of tax returns.
Independent contractors, gig workers and commission-based professionals often earn strong income that full tax returns don't fully reflect. 1099 income loans use your 1099 statements and a documented pattern of earnings to qualify you instead.
Quick answer
What is a 1099 income loan?
A 1099 income loan is a non-QM documentation option that qualifies borrowers using 1099 statements and an expense factor to estimate net income, rather than requiring two years of full tax returns with all schedules. It is commonly used by independent contractors, gig workers, real estate agents, insurance agents and healthcare contractors whose tax returns understate their actual income after deductions.
Written and reviewed by Abdel Khawatmi, Area Manager at Got Mortgages (NMLS #1712023) ·
Why 1099 earners use this path
Contractor and commission income often looks different on paper than it does in the bank.
No full tax return dependency
Qualification is based on 1099 statements and income history rather than every line of a tax return.
Expense factor, not full deductions
A standardized expense factor is applied to gross 1099 income instead of every itemized business deduction.
Built for contractor-style pay
Fits professionals paid per assignment, commission or contract rather than a steady W-2 paycheck.
How 1099 income is used to qualify
Rather than pulling net income off a Schedule C or corporate return, a 1099 income program typically starts with the gross amount reported on 1099 forms over a recent period. That gross figure is then adjusted using an expense factor to arrive at a usable income number.
The exact expense factor, and how many months or years of 1099 history are reviewed, vary by lender and program. The idea is to reflect real earning capacity for someone whose income doesn't flow through a traditional paycheck.
What the expense factor concept means
1099 earners generally cover their own business costs, from mileage to supplies to insurance, so gross 1099 income is not the same as spendable income. An expense factor is a percentage deducted from gross 1099 income to approximate those costs without requiring a full accounting of every deduction.
This differs from full-doc underwriting, where actual tax-return deductions reduce qualifying income, sometimes significantly. The expense factor approach can better reflect real cash flow for many contractors.
Documentation commonly involved
Documentation requirements vary by lender, but the general goal is to verify that 1099 income is real, ongoing and consistent with the borrower's stated occupation.
- Recent 1099 forms from one or more payers
- A letter from a CPA or other third party confirming self-employed or contractor status
- Proof of business activity, license or contractor agreement where applicable
- Bank statements to help corroborate deposits, if requested
- A written history showing continuity of the same type of work
Why continuity of income matters
Lenders want to see that 1099 income isn't a one-time event. A consistent pattern of assignments, clients or commissions over time supports the idea that the income will likely continue, which is central to any income-based qualification, alternative or otherwise.
1099 loans versus bank statement and full-doc paths
Bank statement programs look at deposits into an account to estimate income, which can work well when deposits closely track earnings. A 1099 program instead starts directly from 1099 statements, which can be a cleaner fit when a borrower's 1099s are well organized and deposits are harder to isolate.
Full-doc underwriting remains an option too, and for some 1099 earners with modest deductions, it may produce a comparable or even better qualifying number. Part of our process is comparing documentation paths rather than assuming one is automatically best.
Who this path commonly fits
This documentation type shows up across a range of occupations that share one thing in common: pay that arrives as 1099 income rather than a W-2 paycheck.
- Independent contractors and freelancers
- Gig economy workers
- Real estate agents and brokers
- Insurance agents
- Healthcare contractors, including traveling nurses
- Consultants and other commission-based professionals
Situations where 1099 income loans often come up
- Real estate agents with variable commission income
- Traveling nurses and healthcare contractors between assignments
- Gig workers with multiple payers
- Insurance agents paid primarily on commission
- Consultants transitioning from W-2 to contract work
- Borrowers whose tax returns understate real income after deductions
Keep exploring
- Bank Statement LoansQualify using bank deposits instead of tax returns.
- Profit and Loss LoansUse a CPA-prepared P&L to document business income.
- Self-Employed BorrowersDocumentation paths when tax returns don't tell the whole story.
- Non-QM LoansSee the full range of alternative documentation options.
- All Loan OptionsBrowse every program we structure.
- Build My Mortgage PlanStart mapping out the right documentation path.
Questions people actually ask
- A 1099 income loan is a non-QM documentation path that qualifies a borrower using 1099 statements and related income history instead of two years of full personal tax returns with all schedules.
Send us your 1099 history.
Tell us how you're paid and how long you've been doing this work, and we'll walk through whether a 1099 income path fits.
1099 income program guidelines, expense factors and required documentation vary by lender and are not guaranteed. This page is educational and not a commitment to lend.
Educational information only. Not a commitment to lend, an offer of credit, or a guarantee of terms, approval, savings, or timing. All scenarios are illustrative and anonymized. Equal Housing Opportunity.