Can a 1099 contractor get a mortgage without W-2s?
The 1099 loan, explained for independent contractors whose Schedule C write-offs make a healthy year look thin.
By Nick Saeva, NMLS #2645213. Updated September 2026.
Why do write-offs hurt a 1099 contractor's mortgage application?
Because a traditional lender reads your Schedule C, not your 1099s. The truck, the tools, the miles, the phone, the software. You write off all of it, because that is how a contractor survives tax season. Then you apply for a mortgage and the lender looks at what is left after those deductions, which is a fraction of what you were actually paid.
The 1099s themselves tell the real story: what companies actually paid you. A 1099 loan qualifies you on those forms, not on what remains after the write-offs.
The IRS form that proves what you were paid is sitting in your filing cabinet. This loan actually reads it.
How is income calculated on a 1099 loan?
The lender takes one or two years of your 1099s and applies a default expense factor of roughly 10%, so about 90% of the gross counts as qualifying income. If your real expenses run leaner or heavier than that, a CPA-prepared profit-and-loss can be used instead of the default. Program terms vary.
| Schedule C after write-offs | $3,800 / mo | The number a traditional lender uses. The bank's answer: not enough. |
|---|---|---|
| 90% of his 1099s | $8,100 / mo | $108,000 in annual 1099s × 90% ÷ 12. (Example figures.) |
Two guardrails to know. You will need about a two-year self-employment history in your line of work, because this program rewards a track record. And your year-to-date bank deposits have to support the 1099 income you are claiming: if the forms say $9,000 a month, the account activity needs to look like it.
That deposit test is not a trap. It is what keeps the program honest, and it is exactly what gets checked before anything goes to underwriting.
Who qualifies for a 1099 mortgage?
This approach fits contractors paid on 1099s who have about two years of self-employment history in the same line of work, bank deposits that track what those 1099s say they earn, workable credit, and a real down payment. It is a poor fit for brand-new contractors or for income that does not show up in a bank account.
You are likely a good fit if
- You are paid on 1099s: gig, trades, sales, consulting, delivery, freelance
- You have about two years of self-employment in the same line of work
- Your bank deposits track what your 1099s say you earn
- Your credit is workable and you have a real down payment
- Your Schedule C looks thin only because the write-offs are doing their job
Probably not right now if
- You are brand new to contracting, under about two years of history
- Your 1099 income does not actually show up in your deposits
- A big share of your income is undocumented cash
- Your income swings wildly with long dry gaps
- You cannot put a real down payment together yet
New-ish contractor? Do not force it this year. Mapping an 18-month runway now makes the file easy when you are ready.
What are the trade-offs of a 1099 loan?
A 1099 loan is not identical to a conventional loan. The two-year history is non-negotiable, your deposits have to corroborate the forms, and pricing runs above conventional with a real down payment expected. You are buying documentation flexibility, and that flexibility costs something.
Straight talk, before you are at a closing table.
- 01
This is not for brand-new contractors.
The two-year self-employment history is the backbone of the program. If you just went independent, the honest answer is not yet, and there is real value in knowing that early.
- 02
Your deposits have to back the forms.
Year-to-date account activity gets compared against the 1099 income. Clean, consistent deposits make the file; a mismatch breaks it.
- 03
Pricing runs above conventional, with a real down payment.
You are buying documentation flexibility. Down payment and reserve expectations are real, and they get sized before you shop.
Frequently asked questions
- Can I get a mortgage with only 1099 income and no W-2s?
- Yes. A 1099 loan qualifies you on the income reported on your 1099 forms rather than on W-2s or Schedule C net income. You will generally need about two years of self-employment history in the same line of work, and bank deposits that support the income the forms show.
- How much of my 1099 income counts toward qualifying?
- Typically about 90% of the gross, after a default expense factor of roughly 10%. If your actual expenses run meaningfully leaner or heavier, a CPA-prepared profit-and-loss statement can replace the default factor. Program terms vary by lender.
- Do I need two years of 1099 history?
- Generally yes. About a two-year self-employment history in your line of work is the backbone of the program. Newer contractors are usually better served by waiting and preparing the file rather than forcing an application.
- What is the deposit test on a 1099 loan?
- Your year-to-date bank deposits are compared against the 1099 income you are claiming. If the forms report $9,000 a month, the account activity needs to look consistent with that. It is a corroboration check, not an audit of every line.
- Does a 1099 loan cost more than a conventional loan?
- Pricing generally runs above conventional, and down payment and reserve expectations are real. You are paying for flexibility in how your income is documented, which for the right borrower is a trade worth making.
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Nick Saeva, NMLS #2645213 | Direct Rate Home Loans, NMLS #2419164 | Equal Housing Lender.
Program guidelines vary by lender and are subject to change. This is not a commitment to lend.
This material is educational and is not financial, tax, legal, or accounting advice. Example figures are illustrative only and never an offer. Please consult your CPA, attorney, or financial advisor about your specific situation.