Question 1

Can I qualify with less than 12 months of 1099 income?

Accepted Answer

No. Every lender requires 12 months minimum to establish income consistency. If you switched to 1099 work recently, wait until you have a full year or use asset depletion instead.

Question 2

Do lenders contact every company that issued me a 1099?

Accepted Answer

Yes, for verification. Most respond within 48 hours, but slow responses delay closing. If you have clients who are hard to reach, consider bank statement loans instead.

Question 3

How do lenders calculate my qualifying income from 1099 forms?

Accepted Answer

They take gross 1099 income and subtract an expense ratio between 10-30%. Consultants typically get 20%, contractors 25-30%. You can lower the ratio with documentation proving lower actual expenses.

Question 4

What if my 1099 income varies significantly month to month?

Accepted Answer

Lenders average it over 12 months, which helps. But if you had a major income drop in recent months, they might use the lower current trend instead of the full-year average.

Question 5

Can I combine 1099 income with rental property income to qualify?

Accepted Answer

Yes, if the rental income shows on your tax returns. But using tax returns means your 1099 income also gets pulled from returns, not forms, which usually lowers your qualifying amount.

Question 6

How much higher are rates compared to conventional loans?

Accepted Answer

Expect 0.5-1.25% higher. The exact spread depends on credit score, down payment, and loan amount. Stronger profiles get pricing closer to conventional rates.

1099 Loans in Hillsborough: Financing for Independent Contractors