> ## Documentation Index
> Fetch the complete documentation index at: https://cameron.mintlify.site/llms.txt
> Use this file to discover all available pages before exploring further.

# What is a 1099 Loan

> An overview of 1099 mortgage programs for independent contractors and commission-based workers

A 1099 loan is a specialty mortgage that uses 1099 forms—rather than tax returns—to document and calculate income. These loans are designed for independent contractors, commission-based workers, and freelancers who receive 1099s instead of W-2s.

## Why 1099 Loans Exist

Independent contractors often deduct significant business expenses: home office costs, vehicle use, equipment, professional fees. These deductions reduce taxable income, which in turn reduces what a traditional lender will qualify them for—even if their gross 1099 earnings are strong.

A 1099 loan looks at gross 1099 income before those deductions. If your 1099s show $200,000 in earnings and your tax return shows $80,000 after deductions, a 1099 loan qualifies you closer to the \$200,000 figure.

## How It Works

The lender collects your 1099 forms—typically one or two years' worth—and calculates qualifying income from the gross amounts shown. Depending on the lender:

* Some use 100% of 1099 income directly
* Some apply a modest expense factor (10-25%) to account for unreimbursed business costs
* Some cross-reference 1099 totals against bank statement deposits for additional verification

The resulting figure is used for debt-to-income ratio calculations, just like income on any other mortgage.

## Who Issues 1099s

1099-NEC forms are issued to contractors when a business pays them \$600 or more in a year. You may receive multiple 1099s from different clients. The lender typically adds them together.

1099-MISC forms cover other types of income (rents, royalties, commissions) and are also eligible depending on the source.

## 1099 Loans vs Bank Statement Loans

| Factor             | 1099 Loan                       | Bank Statement Loan        |
| ------------------ | ------------------------------- | -------------------------- |
| Income source      | 1099 forms                      | Bank deposits              |
| Best for           | Contractors, commission workers | Business owners            |
| Expense adjustment | Minimal (0-25%)                 | Varies (10-50%+)           |
| Documentation      | 1099s + self-employment proof   | 12-24 months of statements |

Some borrowers qualify under both programs. When that happens, it's worth calculating which yields higher qualifying income.

## Common Misconceptions

**"My 1099 income is too irregular."** Lenders expect some variation. What matters is the two-year average or trend. A lender may use a 24-month average to smooth out year-to-year differences.

**"I need to show two years of 1099s."** Most programs require two years, but some will accept one year with compensating factors like a higher credit score or larger down payment.

**"1099 loans are the same as bank statement loans."** They're different products. 1099 loans use your form totals; bank statement loans use deposit activity. Some lenders combine both for additional documentation.