If you earn 1099 income, you may qualify under either a 1099-only program or a bank statement loan — and the two can produce very different qualifying income amounts. The better choice depends entirely on your specific numbers.
1099 income comes in many forms, and the best mortgage strategy varies by profession. Here's how the program applies to the most common 1099 borrower types Scott works with.
These loans serve as a strong alternative when traditional guidelines do not match how your income is earned.
Requirements vary by lender and program, but here are the benchmarks that apply to most 1099 mortgage options Scott works with.
Yes. All 1099 income from all sources is combined to calculate your total gross earnings. Whether you receive income from 2 clients or 12, each 1099 is included in the total. The key is that all sources are documented and the deposits appear consistently in your bank statements, confirming that the income is real and ongoing.
This depends on the lender and how dramatic the increase is. If income is rising, some lenders will use the 24-month average. Others allow the most recent 12 months if the increase is reasonable and well-documented. If your income nearly doubled, lenders may want a letter explaining the jump and evidence that it will continue. Scott identifies which lenders are most favorable for growing-income borrowers before choosing where to submit.
A documented explanation matters. If the low year was due to a medical issue, maternity leave, a brief contract gap, or an intentional business decision that's now corrected, a written explanation with supporting documentation can help underwriters understand the context. If the strong year is the most recent one, a lender that allows 12-month calculations may give you a better outcome than the 24-month average.
Yes — many 1099 programs are available for second homes and investment properties. Investment property loans typically require a larger down payment (usually 20–25%) and may have slightly higher rates. For investment properties where the rental income will help support the mortgage, a DSCR loan may be worth comparing alongside a 1099 program.
Seasonal income is very common and generally acceptable as long as the annual pattern is consistent. A landscaping contractor who earns most income in spring and summer, or a tax professional who earns heavily in Q1, is a recognizable pattern to experienced underwriters. Lenders average annual income over 12 or 24 months, smoothing out the seasonal variation. What matters is that the annual total is consistent year over year.
For 1099-only programs, the business structure typically doesn't change the income calculation — what matters is the gross earnings on your 1099 forms. However, if your LLC receives the 1099 payments and then pays you a salary or distribution, the documentation structure changes. Scott reviews your business structure upfront to ensure the income is documented in the way lenders need to see it.
Almost certainly yes. Banks typically have one set of underwriting guidelines — usually conventional. As a broker, Scott works with multiple non-QM lenders who specialize in 1099 income and have guidelines built specifically for independent contractors. A denial from a bank means their program didn't fit your file, not that you don't qualify. Scott identifies the lender whose specific guidelines match your income structure before submitting your application.