Purchase a HomeRefinance My Home
If you’re an independent contractor or self-employed professional in Denver, buying a home may feel like an uphill battle. Traditional mortgage qualifications often rely on W-2 income and tax returns, which don’t always reflect the full financial picture for someone paid on a 1099 basis. Fortunately, 1099 loans offer a flexible alternative designed to help individuals like you achieve homeownership. At Miranda Mortgage, we specialize in helping self-employed borrowers navigate the mortgage process with clarity and confidence.
This guide breaks down everything you need to know about 1099 loans—how they work, who qualifies, and why they may be the perfect fit for your situation.
A 1099 loan is a type of non-traditional mortgage created specifically for individuals who receive income reported on IRS Form 1099. Unlike W-2 employees who earn a consistent salary, 1099 borrowers are typically independent contractors, freelancers, or commission-based professionals.
This loan type is ideal for a wide range of self-employed individuals, including real estate agents, mortgage brokers, financial advisors, consultants, gig workers, and anyone else who may not have traditional income documentation but maintains strong earnings.
One of the biggest hurdles for self-employed borrowers is income documentation. Many take full advantage of tax deductions, which can drastically reduce their reportable income. Traditional lenders may not see the full financial picture, resulting in denied applications or low loan amounts.
1099 loans address this issue by qualifying income based on gross receipts, minus a small expense factor. Typically, only 10% of your 1099 income is deducted to estimate business expenses. For example, if you earned $100,000 on your 1099, $90,000 would be considered qualifying income—a substantial difference that can improve borrowing power.
Even with a down payment as low as 10%, 1099 loans do not require private mortgage insurance. This can result in significant monthly savings compared to conventional loans, where PMI is required for down payments under 20%.
Borrowers can qualify with just one or two years of 1099 forms instead of full tax returns. This streamlined documentation process makes the application far less burdensome and more accessible for newer entrepreneurs.
Unlike many investor-focused loan products, 1099 loans do not carry prepayment penalties. While it’s generally recommended to hold the loan for at least six months, you retain the freedom to refinance or sell your property when it’s best for you.
1099 loans offer generous loan limits, with amounts up to $3 million available. This flexibility extends to various property types including:
Whether you’re buying a home to live in or an investment to grow your portfolio, there’s a 1099 loan product that fits.
You’ll have several loan structures to choose from:
Interest-only loans are particularly useful for maximizing cash flow during the early years of homeownership or during an investment strategy period.
Down payments can be as low as 10% for owner-occupied properties, with loan-to-value (LTV) ratios up to 90%. While 3 months of reserves may be acceptable, having at least 6 months is preferred.
Qualifying reserves can include:
These funds don’t have to be used for the purchase but must be verifiable and accessible.
Borrowers with credit scores as low as 640 may be eligible, though higher scores typically receive more favorable rates and terms. As for employment history, only one year of self-employment may be sufficient, especially for those transitioning from W-2 employment to independent work.
The qualification process is generally more forgiving than traditional loans, but there are still a few key steps to prepare for:
1099 loans are especially advantageous for borrowers who:
If you’re having trouble qualifying for a conventional loan because of how your income is reported, a 1099 loan might offer the flexibility you need to move forward.
While 1099 loans offer significant benefits, it’s important to consider the trade-offs:
There are several non-qualified mortgage (non-QM) loan programs available for self-employed borrowers. Here’s how 1099 loans stack up:
While each option serves a different borrower type, 1099 loans strike a balance between simplicity and flexibility, especially for those with consistent independent income.
At Miranda Mortgage, we understand the unique challenges faced by self-employed borrowers. Our education-based approach ensures that clients not only get the right mortgage but also understand how and why they qualify.
With deep knowledge of the Denver real estate market and a commitment to transparent guidance, we’ve helped countless entrepreneurs, freelancers, and independent contractors secure homes without the frustration that often accompanies traditional lending.
Whether you’re buying your first home or refinancing an existing property, our team is here to make the process smoother.
Ready to learn more or get prequalified?
Call us at 303.520.1786
Or email Naiely@BarrettFinancial.com
Self-employment shouldn’t stand in the way of owning a home. With a 1099 loan, you can leverage your true earning potential—even if it doesn’t fit into a traditional box. Whether you’re a realtor, designer, consultant, or contractor, this flexible mortgage option can open the door to ownership and financial freedom.
Miranda Mortgage is here to help you every step of the way. If you’re earning 1099 income and thinking about buying a home in Denver, it’s time to explore your options. Reach out today for expert guidance and a mortgage plan tailored to your unique financial profile.
