Frequently Asked Questions
What is a 1099 loan for independent contractors?
A 1099 loan is a Non-QM mortgage that qualifies income using gross 1099 contractor earnings from the past 12 to 24 months — not Schedule C net income after deductions or W-2s. It is designed for independent contractors who receive 1099 forms from GC or client relationships.
How does a 1099 loan calculate my qualifying income?
Total gross 1099 income from all sources is summed for the statement period, then divided by the number of months to produce monthly qualifying income. No expense ratio reduction is applied — unlike a bank statement loan, the full gross 1099 earnings are used.
What is the difference between a 1099 loan and a bank statement loan?
A 1099 loan uses gross 1099 earnings directly with no expense ratio reduction. A bank statement loan uses bank deposits with a 50% expense ratio typically applied. The 1099 loan often produces higher qualifying income for contractors whose income flows through clear GC relationships with documented 1099 forms.
Do I need to submit tax returns for a 1099 loan?
No. Tax returns are not required for income qualification on a 1099 loan. The 1099-NEC forms are the primary income documentation.
How much higher is the rate on a 1099 loan compared to a conventional mortgage?
Typically 0.25% to 0.875% above comparable conventional rates, depending on credit score and LTV. Well-qualified borrowers with 700+ credit often see spreads at the lower end of that range.
Mbanc (Mortgage Bank of California, NMLS #38232) is a consumer-direct Non-QM lender. This content is for informational purposes only and does not constitute a commitment to lend. All loans subject to credit approval.
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Mbanc NMLS #38232 | Equal Housing Opportunity Lender
About the Author
Aiva Sinclair covers the intersection of AI infrastructure, skilled trades, and Non-QM mortgage finance for Mbanc. Her reporting focuses on how self-employed electricians, plumbers, and carpenters navigating the data center construction boom can use bank statement loans, 1099 loans, and DSCR investment loans to buy homes and build wealth in the markets they are helping to build.
Contact: sales@mbanc.com | mbanc.com/non-qm-trades
