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3 easy steps.  No cost/obligation

1099

INCOME

HOME LOANS                                    

The Home Loan designed for the unique lending needs of 1099 workers and independent contractors.

1099 House Icon unconventionallending 1099 income program derek bissen

Are you an independent contractor or employee earning 1099 wages? Have you tried applying for a mortgage with your local bank or credit union and been denied because you didn't show enough on your tax returns?

 

Most traditional home loans, such as Conventional, FHA, VA, Jumbo and USDA loans, do a poor job of serving applicants who earn their income through 1099 wages.  On a traditional home loan, the lender is restricted to using only the taxable portion of the applicant's wages for qualification purposes.  

 

Being a 1099 wage-earning employee means that you are simultaneously both an employee and a business owner when your file your income taxes.

 

Many 1099 wage earners hire a tax advisor to maximize the use of the self-employed rules in the US tax code to minimize their tax burden, which saves them thousands of dollars in taxes. (and who doesn't want to save money?)  Unfortunately since their taxable income is substantially reduced--a traditional lender is restricted to using only the taxable portion of your income for qualification purposes, often resulting in a frustrating process, and in many cases, a loan denial.

 

To put it another way, if you tell the IRS that you're 'broke' on your tax returns, then your lender will see the same thing and think that you lack the ability to make the monthly payments for your new mortgage.

 

THE SOLUTION: THE 1099 INCOME PROGRAM

Using our 1099 Income Program, we see things differently.  Instead of your tax returns, we use your wages from your 1099 as the qualifying income for your new home loan, along with two basic verification steps.  

Minimum Down Payment

10%

Minimum Down Payment to avoid PMI

10%

PMI (Private Mortgage Insurance)

N/A (Does not apply to this program)

 

Minimum mid-credit score

620

 

Min/ Max Loan Amount

$100,000 - $3MM

 

Loan Repayment Terms

30 years

 

Amortization

Fixed rate

 

Prepayment Penalties

None*

* for primary residences and second homes. Investment homes may have an optional prepayment penalty. Consult your loan originator.

At a Glance

HERE'S HOW IT WORKS:

 

You must be working at the same business for at least 2 years or longer. We can calculate the income based on either a 2 year 1099 average, or simply on the most recent year's 1099.  

Let's look at the 2 year approach:

  1. Provide your 1099's for the most current 2 years for the same employer. We divide the total figure by 24 months.

  2. Your employer provides a letter confirming your date of hire, and that you have no mandatory job-related expenses.

  3. YTD Bank Statements (for the bank account where you deposit your payroll)

If everything checks out in steps 2 and 3, then we'll use the income in step 1 as the income for your new home loan.

 

If we are using the 1 year 1099 approach:

Simply go back to step one,  and divide the income on your most recent 1099 by 12 months. If steps 2 and three check out, then this becomes the income figure for your new home loan.

If you are a contractor or employee earning 1099 wages, we'd love the opportunity to answer all of your questions and review your options and see if this is the right loan program for you.

 

Remember, stop letting these banks tell you NO, when we have more reasons to say YES.

KEY FEATURES

  • Low Down Payment- as little as 10% down required.
  • Flexible income calculation
  • Flexible credit score requirements– scores as low as 620.
  • Reserves: The amount of reserves depends on the credit score, LTV and the loan amount.
    • For loan amounts: ≤ $1.5MM and FICO 660 or higher - Max 90% LTV = 6 months PITIA
    • For loan amounts: $1.5MM ≤ $3MM and FICO 660 or higher - Max 80% LTV = 12 months PITIA
    • For loan amounts: ≤ $1.5MM and FICO 700 or higher - Max 85% LTV = 3 months PITIA
    • For loan amounts: ≤ $1.5MM and FICO 680 or higher - Max 80% LTV = 3 months PITIA
    • For loan amounts: ≤ $1.5MM and FICO 620 or higher - Max 80% LTV = 3 months PITIA
  • Gift Funds from a family member are acceptable (borrower must demonstrate that they have at least 5% of the purchase price and reserves of their own funds) Consult your Loan Originator
  • Interested Party Contributions (IPC's)- up to 6% of the purchase price.  This includes credits from sellers, real estate agents, builders, etc.)  For Investment Properties - the max contribution is 2% of the purchase price.
  • Occupancy: Owner Occupied, or Second/Vacation Home, or Investment Homes
  • Eligible Home types: Single family homes, Townhomes / Villas, 2-4 Unit Multi-family, condominiums (both warrantable and non-warrantable
  • Unacceptable home types: condotels, mobile homes, manufactured homes, modular homes, dome homes, tiny homes
  • Cannot be used to fund the construction costs of a new home. You can use this program to buy a home from a builder, as long as the builder is fronting the cost of construction, and you're buying the home from their inventory when the home is certified as ready to occupy.

Minimum Mid-credit score and Down Payments:

  • 660+  - Max 90% LTV  (10% Down Payment)
  • 640 – 659 – Max 80% LTV  (20% Down Payment)
  • 620 – 639 – Max 70% LTV  (30% Down Payment)

This is not a commitment to lend.  Not all borrowers will qualify for the loan programs listed.  All program terms and conditions are subject to change and may be discontinued without prior notice.  Contact loan originator for program questions and scenarios.