A 1099 income loan is a type of mortgage designed for self-employed borrowers or independent contractors who receive a 1099 form instead of a W-2. It allows income verification using 1099 statements rather than traditional pay stubs or tax returns.
How It Works in Mortgages
Instead of reviewing employer-issued W-2s, lenders assess your income using your last one or two years of 1099 forms and sometimes bank statements. This gives self-employed professionals—like freelancers, consultants, and gig workers—a fair chance to qualify for home loans based on their actual earnings rather than tax-adjusted income.
Society Mortgage evaluates your 1099 income, average monthly deposits, and business consistency to determine eligibility and loan amount.
Example Calculation
If your 1099 form shows $120,000 in income for the year, your lender may divide it by 12 to calculate a monthly income of $10,000. Using standard debt-to-income (DTI) ratios, your qualifying loan amount will be based on that monthly figure, provided you meet other lending criteria.
Why It Matters to Borrowers
Many self-employed professionals struggle to qualify for traditional mortgages because tax deductions lower their reported income. A 1099 income loan offers flexibility, helping you secure a mortgage based on gross revenue rather than adjusted taxable income.
It’s an ideal option if you’re a contractor, consultant, or business owner seeking a home loan that reflects your true financial standing.
Related Terms
- Bank Statement Loan
- Debt-to-Income Ratio (DTI)
- Self-Employed Borrower
- Income Verification
Need help qualifying for a 1099 Income Loan? Speak with a Society Mortgage Loan Officer today.