The 1099 Income Loan Master Guide (2026 Edition)

A 1099 income loan is a mortgage for self-employed and gig workers that qualifies you on the income reported on your 1099 forms — typically 90–100% of the gross, not the net income on your tax returns. It's a non-QM (non-qualified mortgage) program built for people whose tax write-offs make them look like they earn far less than they actually do.

That's the core problem it solves: conventional underwriting uses your net income after deductions, which can cut a self-employed borrower's qualifying income significantly. A 1099 loan uses your gross 1099 income instead, so the business deductions that reduce your taxable income don't work against your mortgage the way they do under conventional underwriting.

What counts as 1099 income — and who it's for

If your income arrives on a 1099 instead of a W-2, this program was built for you. Common eligible earners:

• Independent contractors and freelancers
• Realtors, insurance agents, and commission-based salespeople
• Consultants and self-employed professionals
• Gig and app-based workers (rideshare, delivery)
• Designers, creators, and other 1099-paid professionals

It works for a primary home, second home, or investment property — and for first-time buyers, not just investors.

The tracker above shows 1099 loan pricing relative to the 30-year conventional benchmark. As a non-QM program, 1099 loans price above conventional — and they fan out by credit and down payment.

1099 rates typically run about 1%–2% above a comparable conventional rate. That premium is the cost of qualifying on gross income without tax returns. The stronger your credit score and the larger your down payment, the closer to the bottom of that range you'll land.

Why 1099 rates are higher

Non-QM loans don't meet the standards that let lenders sell to Fannie Mae or Freddie Mac, so the lender carries more risk and prices for it. For a borrower whose tax returns understate real income, paying a modestly higher rate to qualify on gross earnings is often well worth it.

Instead of digging through tax returns, the lender calculates your qualifying income straight from your 1099s:

• Gross, not net. Lenders use the gross income on your 1099 forms, before business deductions — the opposite of conventional underwriting.
• 90–100% counted. Most programs use 90% to 100% of that gross figure (some apply a small expense factor), with year-to-date earnings verified via recent 1099s or bank deposits to confirm the trend.
• 1–2 years, averaged. Lenders average your 1099 income over the past one to two years. If income is declining, many use the lower of the 24-month average or year-to-date annualized.

A worked example (illustrative)

Figures vary by borrower and lender, but the principle holds: a borrower with substantial write-offs can qualify on meaningfully more income under a 1099 program than under conventional underwriting — often the difference between a denial and an approval.

1099 loans use a DTI calculation like a traditional loan — just built on your gross 1099 income instead of your tax returns. The typical 2026 picture:

The document list is short by design. Expect to provide:

• 1099 forms — the last 12 or 24 months of 1099-NEC or 1099-MISC.
• Year-to-date income — proof of current-year earnings (recent 1099s, invoices, or 2–3 months of bank statements showing 1099 deposits).
• Proof of self-employment history — a business license, CPA letter, or client contracts showing two years in the same line of work.
• Credit report and bank statements — to confirm credit, reserves, and account stability.
• ID and the usual closing paperwork.

Most programs skip tax returns, W-2s, and pay stubs — that's the whole point. Your 1099s do the work your returns would normally do, without the deduction penalty. (Some lenders still request a tax transcript or limited documentation for verification.)

Self-employed borrowers usually have three paths. The right one depends on how your income shows up.

When each wins

• 1099 loan wins if most of your income arrives on 1099 forms — the cleanest match for contractors and gig workers.
• Bank statement loan wins for business owners whose income flows through business or personal deposits rather than 1099s. (See our bank statement loan guide.)
• Conventional wins if you can document strong net income the traditional way — it's the cheapest option when you qualify.

The trade is a modestly higher rate and bigger down payment in exchange for qualifying on what you actually earn. For self-employed borrowers penalized by their own deductions, it's frequently the difference between approval and denial.

A 1099 application skips the tax-return analysis and focuses on your 1099 earnings. It typically closes in 3–4 weeks, for a purchase or a refinance.

1. Pre-qualify. The lender estimates your qualifying income from your 1099s and checks credit and reserves.
2. Gather documents. 12–24 months of 1099s, year-to-date income, and proof of self-employment history.
3. Submit & process. The lender averages your gross 1099 income and sets your qualifying figure and DTI.
4. Appraisal & underwriting. The property is appraised; underwriting verifies income, credit, LTV, and reserves.
5. Closing. Sign and fund — purchase, rate-and-term refinance, or cash-out, on a primary home, second home, or investment property.

• Assuming all lenders count income the same. One lender may use 90% of gross, another 100%, and a third applies an expense factor — that swings your qualifying income and your approval. Shop around.
• 1099 income from your own company. If your 1099s are really pass-through revenue from a business you own, lenders may route you to a bank statement or profit-and-loss program instead. Clarify the source up front.
• Thin or declining history. Most programs want a two-year track record, and a downward income trend can lower your qualifying figure. If you recently moved from W-2 to 1099, ask about programs that bridge the two.
• Letting credit cap your LTV by surprise. A lower score can quietly limit how little you can put down. Know your tier before you shop.
• Underestimating reserves. 1099 income can be lumpy, so lenders want several months of PITIA in the bank after closing. Plan for it.

Do 1099 loans require tax returns?

Most don't — qualification is based on your 1099 forms and year-to-date income. Some lenders may still request a tax transcript for verification.

Is a 1099 loan the same as a bank statement loan?

No. A 1099 loan qualifies on your 1099 forms; a bank statement loan qualifies on deposits into your bank accounts. Both are non-QM, but they document income differently.

Can first-time homebuyers use a 1099 loan?

Usually yes. Non-QM doesn't mean investors only — 1099 loans are available to first-time buyers for primary residences.

How many years of 1099 income do I need?

Usually one to two years. Some lenders accept a single year with prior experience in the same industry.

How much of my 1099 income counts?

Typically 90–100% of your gross 1099 income, depending on the lender and program.

Can I get a jumbo 1099 loan, and can I refinance?

Yes to both — many lenders offer 1099 loans into jumbo territory ($2–3M+), and they're available for rate-and-term and cash-out refinances, not just purchases.

1099 income loans are non-QM products and terms vary by lender — figures here reflect typical 2026 industry ranges. Confirm current specifics with your lender before relying on them.

• Freddie Mac — Primary Mortgage Market Survey (PMMS) (the conventional rate benchmark used in the tracker above)
• IRS — About Form 1099-NEC (what 1099 income is and how it's reported)
• CFPB — Consumer Mortgage Resources (background on qualified vs. non-qualified mortgages)