Traditional home loans, such as Conventional, FHA, VA, Jumbo, and USDA loans, often pose challenges for applicants who earn their income through 1099 wages. These types of loans typically rely on the taxable portion of the applicant's salary for qualification, which can be limiting for those who are self-employed or have non-traditional income streams.
A 1099 Mortgage, also known as a self-employed mortgage, is designed to meet the needs of individuals who may not have the standard documentation used to verify income, such as W-2s or extensive tax returns. Instead, these borrowers can qualify for a mortgage based on 1-2 years of 1099 income documentation.
This type of mortgage is ideal for entrepreneurs, freelancers, small business owners, and other self-employed individuals, offering the opportunity to secure a mortgage at competitive rates without the typical hurdles associated with proving income through traditional means.
The short answer is yes. However, the process requires a bit more than just providing your 1099 forms. The first step in securing a mortgage as a 1099 employee is prequalification. This can often be done by contacting your bank or filling out an online questionnaire with basic information from your Form 1099 income report, along with details about your debts and assets. This initial step gives you an estimate of how much you may be able to borrow to purchase your home.
1099 Mortgages provide a valuable opportunity for self-employed individuals to secure financing tailored to their unique income situations, making homeownership more accessible without compromising on the quality or terms of the loan.
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