Why It’s Good for Self-Employed People

1. Income Flexibility: Traditional mortgage lenders might find it difficult to assess a self-employed person's income due to its variability. 1099 self-employed mortgage loans use methods that better capture the financial realities of self-employment.
2. Less Rigid Documentation: These loans often require less conventional documentation. This flexibility can accommodate the diverse and sometimes fluctuating income patterns of self-employed individuals.
3. Customization: Lenders offering 1099 mortgage loans often have specialized programs tailored to self-employed borrowers' unique situations, providing more personalized and suitable mortgage solutions.

Best Programs for 1099 Self-Employed Borrowers

1. Bank Statement Loans: These loans use personal or business bank statements to verify income. Lenders look at deposits over a period (usually 12-24 months) to determine average monthly income.
2. Stated Income Loans: In some cases, lenders might offer stated income loans where income is declared by the borrower without the need for extensive documentation. However, these are less common post-2008 financial crisis and usually require excellent credit and significant down payments.
3. Non-QM Loans (Non-Qualified Mortgage Loans): These are mortgages that do not meet the traditional lending standards set by the Consumer Financial Protection Bureau (CFPB). They are tailored for borrowers with unique financial situations, such as self-employed individuals. Non-QM loans can include options like bank statement loans, asset-based loans, and other alternative verification methods.
4. Asset Depletion Loans: For self-employed individuals with significant assets but irregular income, asset depletion loans calculate a borrower’s income based on their liquid assets divided by a set period (usually 360 months).

Choosing the Right Program

The best program depends on individual circumstances, including income consistency, credit score, available assets, and down payment ability. Here are some steps to choose the right program:

1. Evaluate Income Documentation: Determine what documentation you can provide. If you have comprehensive bank statements, a bank statement loan might be the best fit.
2. Consult with Lenders: Speak to lenders specializing in self-employed mortgages. They can guide you to the best options based on your financial profile. As loan brokers we do that for you.
3. Consider Terms and Rates: Compare the terms and interest rates offered by different programs. Some might have higher rates but offer more flexibility in documentation.
4. Assess Your Financial Health: Ensure you have a good credit score and enough reserves to meet down payment and reserve requirements.