Many traditional home loans, such as Conventional, FHA, VA, Jumbo, and USDA loans, poorly serve applicants who earn their income through 1099 wages. On a conventional home loan, the lender is restricted to using only the taxable portion of the applicant's salary for qualification purposes.
What is a 1099 Mortgage?
1099 Mortgage loans, also known as self-employed mortgages, allow you to ensure a mortgage without the documentation you usually use to verify your income, such as W-2s and tax returns. Instead, workers qualify based upon the 1-2 years of 1099's.
Entrepreneurs, freelancers, small business owners, and self-employed borrowers get the mortgage you want at the low rates you deserve.
Can 1099 Workers Qualify for Mortgages?
The short answer is yes. But it's a bit more complex than just a simple yes. Don't worry, though, because you'll understand how to get your mortgage after this.
The first step to getting mortgages for 1099 employees is prequalification. It is as straightforward as phoning your bank or completing an online questionnaire with the basic details on your Form 1099 income report, debt, and assets. This information should give you a quick estimate of the amount you can afford to borrow to purchase your home.
Key Features of 1099 Mortgages.
Low Down Payment: Less than 10% down required.
Flexible income calculation
Flexible credit score requirements: Scores as low as 620.
Reserves: The reserves depend on the credit score, LTV, and loan amount (Primary Residence Purchases).
For loan amounts: ≤ $1.5MM and FICO 680 or higher - Max 90% LTV = 6 months PITIA
For loan amounts: $1.5MM ≤ $3MM and FICO 660 or higher - Max 75% LTV = 12 months PITIA
For loan amounts: $100,000 - $1.5MM and FICO 700 or higher - Max 85% LTV = 3 months PITIA
For loan amounts: $100,000 - $1.5MM and FICO 660 or higher - Max 80% LTV = 3 months PITIA
For loan amounts: $100,000 - $1.5MM and FICO 620 or higher - Max 75% LTV = 3 months PITIA
Gift Funds from a family member are permissible (the borrower must demonstrate that they have at least 5% of the purchase price and reserves of their funds). Consult your Loan Originator.
Interested Party Contributions (IPCs)- up to 6% of the purchase price. This includes credits from sellers, real estate agents, builders, etc.) For Investment Properties - the max contribution is 2% of the purchase price.
Occupancy: Owner Occupied, or Second/Vacation Home, or Investment Homes
Eligible Home types: Single-family homes, Townhomes / Villas, 2-4 Unit Multi-family, condominiums (both warrantable and non-warrantable).
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Disclosure: The content provided within this website is presented for information purposes only. This is not a commitment to lend or extend credit. Information and/or dates are subject to change without notice. All loans are subject to credit approval. Other restrictions may apply. Mortgage loans may be arranged through third party providers.
