Direct 1099 income calculation
Lenders read your 1099 forms directly — no tax return reconciliation, no Schedule C nets-out, no 4506-T. The income document is the income document.
1099 income mortgage loans in Texas.
For independent contractors, gig workers, and commissioned salespeople — qualify on your 1099 income directly without the full tax-return scrub.
- 1099 income directly used
- 1–2 year averaging accepted
- Up to 90% LTV
A self-employed mortgage that uses 1099 gross income directly.
A 1099 loan is a Non-QM mortgage that uses your 1099 income directly (typically 1–2 years averaged) instead of requiring full personal tax returns with all the deductions and complexity. Best for independent contractors and gig workers whose 1099 gross income tells a clearer story than tax returns. The lender adds up the gross 1099 amounts, applies a modest expense factor (varies by lender, typically 10% for low-overhead service work), and uses that figure as your monthly qualifying income.
How a 1099 loan goes from inquiry to keys.
- 01
Document 1–2 years of 1099 income
You provide the actual 1099-NEC or 1099-MISC forms from your payers — usually the most recent two years. Some programs accept one year with strong reserves and credit. We verify which option fits before we ask for documents.
- 02
Verify with payer letters or contracts
Lenders want to see the relationship is real and ongoing. A short letter from each major payer (or an active master service agreement / contract) usually does it. We script the request so you can hand it straight to your client.
- 03
Average income and apply the expense factor
Underwriting averages the 1099 gross over 12 or 24 months and applies the lender-specific expense factor. We run the same math up front so the pre-approval matches the final approval.
- 04
Standard credit + reserves underwriting
The rest of the file underwrites like any Non-QM: credit pull, reserve verification, appraisal, and title work. Most 1099 files want 6 months of reserves on a primary residence.
- 05
Clear-to-close and funding
Closing disclosure goes out at least three business days before close per TRID. You sign at title, funds wire, and you get keys. 1099 loans close on the same TRID timeline as conventional — typically 30–35 days from contract.
Built for Texas families earning 1099 income.
A lot of the most reliable earners in Texas — top-producing real estate agents, insurance brokers, IT consultants, full-commission sales reps — get treated like risky borrowers by conventional underwriting because their tax returns are messy. The 1099s themselves tell a much cleaner story. We package those files weekly and know which Non-QM lenders read 1099 income the most favorably for each profession.
A 1099 loan is the right tool when:
- You are an independent contractor (consulting, design, IT)
- You are a real estate agent or Realtor
- You are an insurance agent or broker
- You are a sales rep on full commission
- You are a gig worker (Uber, Lyft, DoorDash) with a two-plus year history
Why a 1099 loan beats conventional for contractors and commissioned earners.
No full tax-return scrub
Your CPA can keep deducting business expenses without it crushing the qualifying income. Same earnings, simpler underwriting.
1–2 year averaging
24-month averaging is standard; 12-month options exist with most Non-QM lenders for borrowers with a strong recent year and adequate reserves.
Up to 90% LTV
Strong-credit 1099 files can go to 90% LTV — meaning 10% down on a primary residence. Most files run at 80% LTV; 90% is reserved for cleaner profiles with stronger reserves.
FICO 660+ typical
Pricing is sharpest at 720+ FICO, but most lenders accept 660 as a floor. That makes 1099 loans more accessible than P&L (700+) for borrowers still building credit.
Owner-occupied or second home
1099 loans work for primary residence and second home. For investment properties most contractors are better served by DSCR — we model the comparison if it applies.
90%
Maximum LTV on a primary residence
1099 loan questions, answered.
Who counts as a 1099 worker?
Anyone who receives a 1099-NEC or 1099-MISC for compensation — independent contractors, freelancers, real estate agents, insurance brokers, consultants, full-commission sales reps, and gig-economy workers (Uber, Lyft, DoorDash, Instacart). The defining trait for this loan is that the bulk of your income shows up on 1099 forms, not on a W-2.
How is income calculated on a 1099 loan?
The lender adds up the gross 1099 amounts over 12 or 24 months, applies a modest expense factor (typically around 10% for low-overhead service work; higher for gig drivers with vehicle costs), and divides by the number of months. That figure becomes your monthly qualifying income for DTI calculation.
What if my 1099 income varies year to year?
Lenders typically use a 24-month average, which smooths out year-to-year swings. If your most recent year is significantly lower than the prior, expect underwriting to ask for an explanation — sometimes that just means a brief letter; sometimes it means we use the lower year as the qualifying figure to be safe.
Do I need 2 years of 1099 history?
The standard ask is two years. Some Non-QM lenders accept one full year of 1099 history if you have prior W-2 work in the same line of business, strong reserves, and clean credit. We will tell you straight which lender to chase based on your file.
Can I use a 1099 loan to refinance?
Yes. 1099 loans are available for rate-and-term and cash-out refinances on primary residences and second homes, subject to the same income, credit, and reserve requirements as a purchase. Cash-out is typically capped at 80% LTV.
How is this different from a Bank Statement loan?
Bank statement loans use deposit totals across 12–24 months of your bank statements — they capture all income flowing through the account, not just 1099 income. 1099 loans use the 1099 forms themselves. If most of your income comes through 1099s and the documents are clean, the 1099 loan is usually simpler. If your income is mixed (some 1099, some cash, some other deposits), bank statement loans often qualify higher.
1099 contractor in Texas? Get qualified on your 1099 income.
1099 loan requirements at a glance.
- Two years of 1099 income (some lenders accept one year with strong reserves)
- Verifiable payer relationships — contracts or payer letters from major clients
- 660+ FICO typical (best pricing at 720+)
- 10% down on a primary residence (15% required for 90% LTV cap)
- Six months of reserves (PITI) post-close
- DTI of 50% or lower
- Texas property
- Owner-occupied or second home
1099 vs Bank Statement vs Conventional at a glance.
| Income calc | History required | FICO | Best for | |
|---|---|---|---|---|
| 1099 Loan | 1099 gross with expense factor | 1–2 years | 660 | Contractors and commissioned earners with clean 1099s |
| Bank Statement | Deposits with expense factor | 12–24 months statements | 660 | Self-employed with mixed deposit sources |
| Conventional | Tax-return net income | Two years 1040s + Schedule C | 620 | Contractors whose returns actually support the income |
Ready to move on a 1099 Income Loan?
Get a soft-pull pre-approval in minutes. No credit hit, no surprises.
Other ways we close
Bank Statement Loans
Sibling Non-QM program — qualifies on 12–24 months of business or personal bank deposits when 1099s are not the cleanest story.
Learn moreP&L Statement Loans
For self-employed buyers with an active CPA — qualifies on a CPA-prepared profit and loss statement instead of 1099 forms.
Learn moreAsset Depletion
For 1099 earners with substantial liquid assets but variable current income — assets convert to qualifying income.
Learn more