Overview of 1099 Mortgages for Self-Employed Borrowers

Overview of 1099 Mortgages for Self-Employed Borrowers

Overview of 1099 Mortgages for Self-Employed Borrowers

About 15 million U.S. workers, or 10% of the U.S. workforce, are self-employed, according to Pew Research Center. You are self-employed if you own 25% or more of a business or work as a freelancer, a gig worker, or an independent contractor. If you get a 1099 for your services, you are considered self-employed. 

What if, as a 1099 entrepreneur, you want to buy or refinance a house? Getting approved for a mortgage with traditional lenders can be difficult, and some lenders do not offer non-traditional income mortgages altogether. Those who do, require regular, consistent income with the same employer and are usually not flexible enough to accommodate dynamic financial profiles of the self-employed professionals. 

Specialist lenders, like MBANC, understand self-employed professionals and their unique circumstances. We offer 1099 mortgages, also known as no tax return, non W-2, or alternative income mortgages designed specifically for 1099 entrepreneurs.

What Is a 1099 Mortgage? 

1099 forms are IRS forms that document income paid to someone from an entity they aren’t employed by. Freelancers, gig workers, independent contractors, and other self-employed professionals receive 1099 forms when they deliver work to a business. 

A 1099 mortgage is a type of mortgage that is available to borrowers who earn 1099 income. The 1099 mortgages are designed to help borrowers who may have difficulty qualifying for a traditional mortgage due to their irregular or seasonal income.

A 1099 mortgage, like one MBANC offers, is designed specifically for self-employed professionals. These mortgages require no W-2s, pay stubs, or tax returns. With MBANC’s 1099 mortgage, you can use the 1099 forms from the past two calendar years to verify your income. 
Read how a savvy, self-employed client of MBANC, Scott, purchased his dream home with self-employed income using a self employed mortgage.

How Does the 1099 Mortgage Work? 

Mortgage terms vary from lender to lender. You need to read and compare them carefully to make sure you choose a mortgage product that meets your needs. 

As an example, the key terms of the 1099 mortgage with MBANC are: 

  • Loan amounts up to $4 million, cash out refinance up to $3 million. 
  • Qualify using year to date or 12 months of 1099 income
  • No Tax Returns, W-2’s, or Pay-stubs required to qualify
  • I0-year interest only option on 30- and 40-year term mortgages. 
  • Occupancy types: Primary residence, second home, investment property. 
  • Property types: Single family residence, condo, condo-tel, 1-4 unit, 5-8 unit. 
  • Down payment. As low as 15%.

How Does the 1099 Mortgage Work? 

The process of getting a 1099 mortgage is similar to the process for getting a traditional mortgage and involves these five steps: 

  1. Get pre-approved. This will give you an idea of how much you can borrow and how much you will pay monthly. 
  2. Compare interest rates, fees, and terms from reputable lenders. 
  3. Submit your application. The lender will need you to provide your personal and financial information and supporting documentation. 
  4. Get approved. The lender will review your application and make a decision. If you are approved, you will need to sign a loan agreement. 
  5. Close on your home. Once the loan is processed and underwritten, you will be able to sign the closing documents. 

How to Choose the 1099 Mortgage Lender

To choose the lender that is right for you, you need to do your research and consider your circumstances, for example, which documents you have or what down payment you can afford. Other important considerations include: 

  • Lender and loan officer expertise
  • Direct lender or broker lender
  • Competitive Interest rates and fees.
  • Credit score and debt-to-income ratio requirements.
  • Down payment requirements.
  • Loan terms

You can apply with a traditional lender, but there are several challenges to be aware of for self-employed professionals: 

  • You will need to provide more paperwork to verify income compared to W-2 employees. 
  • If you use business expenses to reduce taxable income, you may not be able to evidence enough income to qualify for a traditional mortgage. 
  • Some lenders require a larger down payment from self-employed professionals. 
  • Some lenders do not offer mortgages to self-employed individuals due to increased paperwork and underwriting requirements. 

There are lenders that specialize in 1099 mortgages for the self-employed. They include non-qualified mortgage (non-QM) lenders, like MBANC, private lenders, some credit unions and community banks. Make sure that the lender you choose is licensed and reputable. Check with your state’s banking department to verify a lender’s license and read customer reviews online. 

How to Get Approved for the 1099 Mortgage

When you apply for a 1099 mortgage, the lender will typically look at your income from the past two years to determine your eligibility. They will also consider your credit score, debt-to-income ratio, and other financial factors. For example, at MBANC we have the following approval requirements: 

  • Income: Two years or one year of 1099 income accepted as long as it’s regular and from the same source. 
  • Credit score: minimum 660 FICO. 

If you are approved for a 1099 mortgage, the lender will work with you to determine the loan amount and terms that are right for you. You will then need to provide the lender with the required documentation.

The documents you need to provide for a 1099 mortgage will vary depending on the lender. For example, at MBANC we require: 

  • Proof of income (e.g., bank statements). 
  • Two years of self-employed work history (e.g., contracts or invoices). 
  • If you co-own a business, you’ll need to provide documentation showing how much of the business you own. 
  • Financial details. 

Once you have provided the required documentation, the lender will process your loan and, if approved, you will be able to close on your home.

Tips for Getting the 1099 Mortgage 

Based on our experience, we advise MBANC clients the following: 

  1. Get organized. Make sure you have all of the required documentation before you start the application process. 
  2. Be prepared to answer questions about your income. The lender will want to understand how you make your money and how much you expect to earn in the future. 
  3. Be honest and upfront with the lender. If you have any financial challenges, be sure to disclose them to the lender.


We have been a premier consumer direct lender since 2005. Our founders are leaders with over 100 years of experience combined and closed deals in the billions of dollars in total. Our proprietary process delivers proven results. 

Getting a mortgage with MBANC is different compared to other lenders. At the outset, you are working with knowledgeable, understanding, expert loan officers to find the best solutions for your mortgage needs. Excellent client reviews on Google are a testament to our customer service. 
We let you know upfront exactly what paperwork we need so you don’t waste your precious time. An average approval with us takes just 17 days. We are completely transparent regarding the terms of your loan. Get in touch with us today and our experienced mortgage officers will guide you through the options available to you.

We let you know upfront exactly what paperwork we need so you don’t waste your precious time. An average approval with us takes just 17 days. We are completely transparent regarding the terms of your loan. Get in touch with us today and we will guide you through the options available to you. 

What Are 1099 Mortgages?

When using a 1099, we will review your total income and take away an expense ratio of 10% (unless otherwise provided) and qualify you on the remaining 90% of income. If you have several forms of income, we will add all of the sources together to determine your average monthly income. We can consider most sources of income that have a two-year history!

What documents are needed for a 1099 Jumbo Mortgage

Self-employed borrowers will need to submit all required documentation to qualify, such as:

  • Proof of Income
    • 1099 Income
  • 2 Years of Self-Employed Work History
    • If you co-own a business, you’ll need to document how much of the business you own.
  • Borrower Financial Details
  • Property Details 

What are the Rates for Self-Employed Borrowers?

Your specific mortgage rate is influenced by a range of elements: income evaluation method, down payment/equity status, credit score, loan term, income, and debt. Reach out to us for a complimentary quote on our competitive rates for self-employed mortgages and discover your potential qualification amount

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