Mortgage With 1099 Income: How It Works
October 20, 2026
Yes, you can get a mortgage with 1099 income. Most conventional, FHA and VA lenders treat 1099 contractors as self-employed, so they qualify you on the net income shown on your tax returns, usually covering two years. If business deductions make your taxable income much lower than what you actually earn, some non-QM lenders offer 1099-only programs that qualify you from your 1099 forms instead of your returns, generally at different pricing.
How agency loans treat 1099 income. Because 1099 workers usually report income and expenses on Schedule C, conventional, FHA and VA guidelines generally require a two-year history of self-employment income, though a shorter history can sometimes work if you had a similar W-2 job in the same field before going independent. The lender starts from your net profit after expenses, adds back certain non-cash deductions such as depreciation, and averages the result. Declining income draws extra questions. If you have both W-2 and 1099 income, the W-2 portion is usually documented with pay stubs and W-2s, and the 1099 portion with your tax returns. Expect the lender to verify your filings with IRS tax transcripts.
How 1099-only programs work. These non-QM programs typically use one or two years of 1099 forms, apply an expense factor set by the lender or confirmed by a tax preparer, and verify that the income is still being received, often with recent bank statements or a letter from the paying company. They don't require your full tax returns, which helps if heavy write-offs lower your taxable income. The trade-offs are higher pricing than agency loans, credit, equity and reserve requirements set by each lender, and possible prepayment penalties on investment properties. Lenders still must make a good-faith determination that you can repay under the federal ability-to-repay rule. Because each lender sets its own expense factor and history requirements, the same 1099 income can qualify for different amounts at different lenders, which makes comparing several worthwhile.
How to prepare and quick answers. File your taxes on time and talk with your tax professional before filing if you plan to buy soon, since deductions that lower your tax bill also lower qualifying income for agency loans. Keep business and personal funds in separate accounts, gather two years of 1099s and returns, recent bank statements and proof of reserves, and be ready to explain gaps or large deposits. Do you need a CPA letter? Some lenders ask for one to confirm your business or expense ratio. Can a new contractor qualify? Possibly, if you stayed in the same line of work. Should you try a 1099-only loan first? Not if you can qualify with your returns. Compare both options side by side. Does income from several clients count? Yes, as long as it's documented, and lenders look at the total and whether it's stable. What about gig and app-based work? It's usually treated as 1099 self-employment income, so the same rules apply. See our bank statement loan post and our self-employed overview at lofirate.com/blog/self-employed-mortgage-options-2026-10-20.
Most lenders treat 1099 income as self-employment income and qualify you on two years of tax returns. If write-offs reduce your qualifying income, 1099-only non-QM programs are an alternative at different pricing. Organize your documents early and compare both routes in writing. Sources: Fannie Mae Selling Guide, self-employment income (B3-3.2); HUD Handbook 4000.1; 12 CFR 1026.43. General education only. LoFi Rate is an independent matching service, not a lender or mortgage broker. If you request a match, your information is shared with independent mortgage professionals licensed in your state.