1099 Mortgage Loan: How to Buy a Home Without W-2 Income or Tax Returns
- By Jim Blackburn
- on
- 1099 Mortgage, Buy A House, Self-Employed Loans
How an Independent Sales Contractor Got Approved for $378,000 After Being Denied by Traditional Lenders
Nathan thought homeownership was out of reach. As an independent sales contractor pulling in over $120,000 a year, he had the income—but not the paperwork traditional lenders wanted to see.
After being turned down by two big banks, he was frustrated. “I make great money,” he told us on our first call. “But apparently, that doesn’t matter if you’re a 1099 contractor.”
That’s when we introduced him to a 1099 mortgage loan—a financing solution designed specifically for self-employed and contract workers like him.
Client Profile
- Name: Nathan R.
- Age: 33
- Profession: Independent Sales Contractor (1099 income)
- Years in Business: 4+ years
- Annual Income: $120,000+
- Location: Phoenix, AZ
- Home Type: Single-story ranch in North Phoenix
- Purchase Price: $378,000
- Loan Type: 1099 Mortgage Loan (Non-QM)
- Down Payment: 10% ($37,800)
- Credit Score: 702
The Challenge: Great Income, Wrong Paperwork
Nathan’s situation is heartbreakingly common. He’d been working as an independent sales contractor for over four years, consistently earning six figures. But when he applied for a mortgage with his local bank, he was denied.
The problem? His tax returns.
Like most smart self-employed professionals, Nathan took advantage of legitimate business deductions—home office expenses, vehicle costs, professional development, health insurance. These write-offs lowered his taxable income to around $68,000, even though his actual gross income was nearly double that.
Traditional lenders only saw the $68,000. They couldn’t—or wouldn’t—look past his adjusted gross income (AGI).
“I felt like I was being punished for being smart about my taxes,” Nathan said. “I had savings, great credit, stable income for years. But none of that mattered because I wasn’t a W-2 employee.”
He tried two more lenders. Both said the same thing: “Your income doesn’t qualify.”
Nathan was ready to give up on buying a home entirely when a friend referred him to our team.
The Strategy: A 1099 Mortgage Loan Built for Contractors
After reviewing Nathan’s financial profile, we knew immediately that a 1099 mortgage loan was the answer. This Non-QM loan program is specifically designed for independent contractors and self-employed borrowers whose income doesn’t fit the traditional W-2 mold.
Here’s what made Nathan’s 1099 mortgage loan work:
We Used Gross Income, Not Net Instead of looking at his taxable income after deductions ($68K), we used his gross 1099 income ($120K+). This is the core benefit of a 1099 mortgage loan—it recognizes your real earning power.
Simple Documentation
- Last 2 years of 1099 forms from his primary client
- No tax returns required
- No profit & loss statements
- No complicated CPA letters
Just a straightforward average of what he actually earned.
10% Down, No PMI: Nathan put down 10% ($37,800) and because this 1099 mortgage loan is a Non-QM product, there was no monthly private mortgage insurance—saving him an extra $200+ per month.
Pre-Underwritten for Speed: We submitted Nathan’s file for pre-underwriting before even finding a house. When he made an offer, we already had conditional approval in hand. This made his offer competitive even in Phoenix’s hot market.
Why a 1099 Mortgage Loan Made Sense for Nathan
Nathan’s situation is common among self-employed professionals. While his actual income was substantial, his tax returns told a different story due to business expenses and write-offs. A 1099 mortgage loan bypassed this issue entirely by focusing on what he actually earned according to his 1099 forms, not what remained after deductions.
This type of loan is ideal for:
- Independent contractors with consistent 1099 income
- Real estate agents and commissioned sales professionals
- Gig economy workers with multiple income streams
- Self-employed individuals who maximize tax deductions
The Outcome: From Denied to Homeowner in 21 Days
Nathan closed on his Phoenix home just 21 days after going under contract.
The results:
- Approved for $380,000+ based on his real income
- Monthly payment of $2,640 (PITI) – well within his budget
- No PMI – saving $200+/month compared to conventional financing
- Fast close – made his offer competitive against other buyers
- Rate of 6.75% – competitive for a Non-QM loan in 2025
But the real outcome? Peace of mind.
“I’m not worried about my mortgage payment,” Nathan told us after closing. “Even in slower sales months, I’ve got this covered easily. And in good months? I’m putting extra toward principal.”
Nathan’s already planning his next move: Using another 1099 mortgage loan to buy a rental property next year. Now that he understands how the program works, he sees it as a long-term strategy for building wealth through real estate.
Quote from Nathan:
“I always assumed I couldn’t get a loan because I was a contractor. I had the income—I just needed someone to recognize it. This program was perfect. If you’re 1099 and have been told ‘no’ by other lenders, talk to these guys. They get it.”
Could a 1099 Mortgage Loan Work for You?
If Nathan’s story sounds familiar—if you’ve been denied because of your tax returns, even though you know you earn enough—a 1099 mortgage loan might be exactly what you need.
We specialize in helping self-employed professionals, independent contractors, and 1099 workers get approved when traditional lenders say no.
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