​Purchasing a Property as an Independent Contractor

If you’re an independent contractor, you’re part of a rising tide in a recent workforce change in which more high-skilled workers are choosing contract work over salaried positions. But many mortgage products are tailored to people in the latter group, requiring pay stubs and W-2s from traditional jobs in the approval process. However, there are loans designed specifically for people who are their own bosses.

Why 1099 Only Loans Make Sense

People who work on commissions or earn income as independent contractors generally get a 1099 IRS form at the end of each year. And so a Simple Access^® Non-QM 1099 Only loan bases qualification on two years of those forms. That’s it! No pay stubs, no tax returns, no complicated employment verification that often comes with other types of mortgage loans. With 1099 Only, potential borrowers can qualify just with proof of funds in savings, checking, and money market accounts, as well as retirement accounts and marketable securities.

What types of homes are eligible? Almost all types, including primary homes, second homes, and investment properties, up to $3.5M. Versatile 1099 Only loans are available for both adjustable and fixed-rate mortgages, with allowances for debt-to-income ratios up to 55%, and borrowers can qualify with credit scores as low as 620.

Where are independent contractors buying homes?

Away from congested areas. Prompted, in part, by the work-from-home shift brought on by COVID-19, more and more Americans are leaving downtowns. With less of a need to live near the offices in which they work, as many as five million Americans have moved due to remote work between 2020 and 2022.

Homebuilders are responding to this shift. According to the National Association of Homebuilders’ Home Building Geography Index (HBGI), construction of single-family homes in major metropolitan cores and inner suburbs fell 44.5% to 41.6% between the pre-COVID fourth quarter of 2019 and the second quarter of 2022. At the same time, construction of single-family homes grew from 17.4% to 19% in medium-size metropolitan areas and in outer suburbs. While these 2% to 3% shifts may not seem like much, one needs to consider that these are national numbers in a country that builds over a million new homes every year.

If you’re an independent contractor, a gig economy worker, or have other non-traditional income, Luxury Mortgage has the mortgage that’s perfect for you. Contact one of our expert loan originators today.

Disclaimer: Please note that underwriting guidelines are subject to change and may have already changed by the time you are reading this post. Always check with a mortgage loan originator for the most accurate and updated information on loan requirements.