1099 Loans
1099 Loans
A 1099 loan is a mortgage for independent contractors and 1099 workers in Arizona who are paid on a 1099 instead of a W-2. Rather than traditional W-2 documentation, you qualify using your 1099 income, plus year-to-date proof of what you’re earning now. It’s a good fit if you work as a contractor for a company and want a simpler path to a mortgage with 1099 income.
Key Requirements & Features
Below are the typical 1099 loan requirements we see from our lender network:
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Minimum credit score: 620
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Down payment: Starting as low as 10%. For example, a 620 credit score typically requires 25% down
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Loan amounts: $75,000 to $4,000,000
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Income documentation: At least 1 year of 1099 income, plus year-to-date earnings shown through bank statements, an earnings statement, or paystubs
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Income calculation: A 10% expense factor is applied to your 1099 income
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Work history: At least 1 year working for the same company or client
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Number of 1099 jobs: Income must come from one 1099 job
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Debt-to-income (DTI) ratio: Up to 55%
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Reserves: Minimum of 3 months
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Credit events: Bankruptcy or foreclosure allowed after 12 months
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Cash-out refinance: Available up to 80% loan-to-value (LTV)
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Occupancy: Primary residence, second home, or investment property. 2-4 unit properties aren’t available as second homes
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Property types: Single-family homes (including rural), townhomes, condos (warrantable and non-warrantable), condotels (condos operated like hotels), 2-4 unit properties, PUDs, short-term rentals, and leasehold properties
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Loan terms: 30-year fixed, 40-year fixed, 5/6 ARM, and 7/6 ARM
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Interest-only option: 10-year (120-month) interest-only period, followed by 20- or 30-year amortization. Qualified at the fully amortized payment (PITIA) after the interest-only period
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Borrower eligibility: U.S. citizens, permanent residents, non-permanent residents, and ITIN borrowers
Who 1099 Loans Are Best For
1099 loans tend to be the best fit for Arizona independent contractors if you:
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Are paid on a 1099 and have worked for the same company or client for at least a year
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Have a 1099 that clearly shows your income and want a simpler paper trail than 12 to 24 months of bank statements
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Want a lower expense factor applied to your income than most self-employed loan programs use
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Want to buy a primary residence, second home, or investment property
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Are recovering from a bankruptcy or foreclosure that’s at least 12 months behind you
Not the best fit if: you earn 1099 income from several clients at once. This program is built around one 1099 job, and a bank statement loan may fit better. If you have steady W-2 income, a conventional or FHA loan may be simpler.
Frequently Asked Questions
What is a 1099 loan?
A 1099 loan is a mortgage for independent contractors that uses your 1099 income to qualify instead of traditional W-2 documentation. It’s designed for borrowers who are paid as contractors rather than employees.
Can I get a mortgage with 1099 income?
Yes. With a 1099 loan, you can qualify using at least 1 year of 1099 income from the same company or client, plus year-to-date proof of earnings.
What are the requirements for a 1099 loan in Arizona?
You’ll typically need a credit score of 620 or higher, at least 1 year working for the same company, 1099 income from one job, 3 months of reserves, and a DTI of 55% or lower. Loan amounts go up to $4 million.
What documents do I need for a 1099 loan?
You’ll provide your 1099 for at least the past year, plus year-to-date earnings shown through bank statements, an earnings statement, or paystubs.
How is my income calculated on a 1099 loan?
Lenders apply a 10% expense factor to your 1099 income, so 90% of it counts toward qualifying.
Can I qualify with more than one 1099 job?
This program uses income from one 1099 job. If you earn income from several clients, a bank statement loan may be a better fit, and we can help you compare.
What’s the difference between a 1099 loan and a bank statement loan?
A 1099 loan qualifies you using your 1099 income, with a 10% expense factor. A bank statement loan qualifies you using 12 or 24 months of deposits, and business accounts typically start with a 50% expense factor. The right choice depends on how you’re paid and what your income looks like on paper. We’ll run both and show you the difference.
How much down payment do I need for a 1099 loan?
Down payments start as low as 10% with stronger credit and go up at lower scores. For example, a 620 score typically requires 25% down.
Can I get a 1099 loan after bankruptcy or foreclosure?
Yes. Our lender network allows 1099 loans 12 months after a bankruptcy or foreclosure.
Can I do a cash-out refinance with a 1099 loan?
Yes. Cash-out refinances are available up to 80% loan-to-value.
Can I use a 1099 loan for a second home or investment property?
Yes. 1099 loans can be used for primary residences, second homes, and investment properties. 2-4 unit properties aren’t available as second homes.
Is there an interest-only 1099 loan?
Yes. Our lender network offers a 10-year interest-only period, followed by 20 or 30 years of amortization. Your qualifying payment is based on the fully amortized payment after the interest-only period ends.
Do 1099 loans have higher rates than conventional loans?
Alternative loans often carry higher rates when you go through a single lender. Because we compare options across our network of lenders, we’re frequently able to find 1099 loan rates that are competitive with conventional pricing. We’ll show you real numbers so you can compare for yourself.
How do I get started with a 1099 loan in Arizona?
As a licensed Arizona mortgage broker, we compare 1099 loan options across our network of lenders. Reach out for a free consultation to talk through your income.
Ready to See Your Options?
Tell us a little about what you’re looking for, and one of our Arizona loan officers will reach out. No pressure, just options.
