The number of freelancers or self-employed workers in the U.S. is steadily increasing. The freelance life is very appealing to those who want flexibility in their schedules and more control over their careers, but the choice to be your own ‘CEO’ can complicate getting a conventional mortgage loan for 1099 workers who may not have a predictable income. The 1099 Only Mortgage Program from Luxury Mortgage was designed exclusively to help freelancers qualify for a home loan using their bank statements instead of their tax returns.
What is the 1099 Only Mortgage?
The 1099 Only Mortgage Loan is a non-qualified (Non-QM) mortgage that allows the borrower to qualify for the loan based on personal or business bank statements rather than requiring tax returns.
How do I Qualify?
If you are self-employed, an independent contractor, a worker with seasonal income, a gig worker or freelancer, you may qualify for Luxury Mortgage’s 1099 Only Mortgage Program. Borrowers must have a minimum of one year self-employment (with prior related experience), a minimum credit score of 620 (subject to loan amount and LTV restrictions) and be able to provide the following documentation*:
- Most recent two years of 1099s.
- Documentation of year-to-date income.
- A CPA completed profit and loss statement or expense ratio letter.
- 1099 transcripts.
Tips to Prepare for the 1099 Only Mortgage Qualifying Process
If you think Luxury Mortgage’s 1099 Only Mortgage program might be your path to homeownership, there are some things you can do to help improve your chances of being approved.
Get your documentation together. No different than a traditional mortgage, the 1099 Only program also requires documentation. Since freelancer workers may have several different income streams or project-based sources, it’s important to gather all of your paperwork. Since some of your income may come in the form of cash, promptly deposit it into your bank account so it can be recorded as income.
Separate your accounts and expenses. It is a good idea to have a separate bank account that is used solely for your freelance business. This will also help ensure you aren’t commingling your business and personal expenses so you can better track your actual income.
Keep your bank statements healthy. Since your bank statements will be the core of the qualification process, it’s important to make sure they are financially strong with a positive account balance, little to no overdrafts, and regular income deposits. You’ll also want to make sure you have enough money to cover at least the down payment, closing costs, and a few months’ mortgage payments.
Advantages of the program
- No tax returns needed
- Loans up to $3 million
- Flexible property types
- Interest-only feature available with 30-year term
- All occupancy types allowed
- Multiple financed properties allowed
- Purchase or Rate and Term Refinance Max LTV 85%
- Cash Out Max LTV 75
- Multiple 1099 qualification options
Ready to Learn More?
Connect with one of our licensed mortgage consultants today to learn more about the 1099 Only program.
We're dedicated to helping borrowers find the right home loan program for their situation. Contact us today for a free quote and consultation.
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