For contractors and gig workers
Paid as a contractor, freelancer or gig worker? Your income can be documented through your tax returns or, with some lenders, through your 1099s. Samantha looks at both before you pick one.
The short answer
Fannie Mae, Freddie Mac and FHA generally review 1099 pay much like self-employment income: about two years of history, your tax returns, and the income left after the expenses on your Schedule C. If that number supports the loan you need, the agency route can cost less. If it does not, some non-QM lenders qualify you from the 1099s themselves, on terms that vary by lender.
How it works
The agency route. These are each agency's rules, not Align's terms.
The non-QM route. A non-QM loan sits outside the federal qualified mortgage standards, so each lender writes its own guidelines. A 1099-only program reads your 1099s rather than your tax returns. How many years it reads, and whether an expense factor comes off the gross, is set by each lender. Your income is still verified with third-party records (12 CFR 1026.43(c)(4)).
| Agency route | Non-QM 1099 route | |
|---|---|---|
| Income counted | Net income from your returns, averaged, with some non-cash deductions added back | Your 1099 totals, often less an expense factor the lender sets |
| Documents | Two years of returns with all schedules or IRS transcripts, your 1099s, year-to-date proof | 1099s and year-to-date earnings; varies by lender |
| Typical tradeoffs | Write-offs lower the income counted; fixed history rules | Can be priced above agency loans; can need more cash down and in reserve |
Before you apply
Know the tradeoffs
Working with Align
"Just tell me the story. Then give me the documents." Tell me how you get paid and send me your 1099s and returns. I'll look at the agency route first, then compare non-QM options across multiple wholesale lenders and put them side by side. If waiting for one more year of returns makes more sense, I'll tell you that too.
Official sources
Program rules change. These are the official pages this page was checked against.
If yours is not here, ask it on the call. There are no dumb questions.
Usually. The IRS generally treats independent contractors as self-employed, and they report that income on Schedule C. Fannie Mae and FHA have no separate 1099 rule, so it falls under their self-employment rules. Freddie Mac also offers a contractor path for people whose Schedule C shows almost no expenses.
Plan on two for the agency route. Fannie Mae, Freddie Mac and FHA each allow a shorter history in some cases, generally at least 12 months and backed by earlier work in the same field. Non-QM programs set their own minimums. A few months from a second full year, timing can matter.
The agency route reads what you kept, not what you billed. Schedule C subtracts your business expenses, and the lender starts from that net figure, adding back some non-cash deductions such as depreciation. A 1099-only loan starts from your 1099 totals instead, which is why it can count more income when write-offs are heavy.
It is a non-QM loan that qualifies you from your 1099s and this year's earnings instead of your tax returns. Many lenders apply an expense factor to the gross total. No agency sets the rules, so the history required, down payment, reserves and pricing vary by lender. Federal ability-to-repay rules still apply.
It can. Fannie Mae reviews each income type under its own rules and recommends two years of history for each, accepting no less than 12 months when other strengths support it. A lender may leave new or uneven side income out and use the W-2 income alone. Mention both at the start so the documents match the plan.
As a first-time homebuyer in Ferndale, I was unsure of some things. Samantha was awesome. She was extremely helpful and made sure I understood every part of the process.
Samantha was extremely helpful during my home loan process in Novi. Communication was quick, the instructions were clear, and everything stayed on track through closing.
Want to shout out Samantha for the expert guidance, made my first-time homebuyer experience seamless! It exceeded expectations and was a stress free process throughout. Grateful for all your help and loving my new home in Bloomfield Hills!
Samantha Shelton was absolutely amazing! She far exceeded any expectations we had. Samantha was our biggest cheerleader throughout the entire home buying process! It literally felt like my best friend was helping us navigate and cheering us on from start to finish. I would recommend her and the team to anyone; you will be in THE best hands. She is so knowledgeable and kind. This was the best, easiest and least stressful mortgage process ever.
can’t say enough good things about my experience with Samantha Shelton . She took the time to explain every step of the process, answered all my questions promptly, and made sure everything stayed on track. Her professionalism, honesty, and dedication truly stood out. I would recommend her 100% to anyone buying or refinancing a home. My refinance loan was submitted, approved and clear to close the same day, that’s unheard of in the industry. What a rock star !
As a first-time homebuyer in Troy, I was nervous about getting my FHA loan. I went to Samantha Shelton at Align Lending and the experience was nothing short of amazing! Her expertise and fast service made everything so easy. I will definitely be going back to her, and I recommend her if you are looking for a fast and easy mortgage experience!
Individual experiences. Results vary.
Tell Samantha what you are trying to do, and she will tell you what actually matters in your situation. If the answer is that you should wait, she will say that too.
Not what product you want. What you are actually trying to accomplish.
A licensed Align loan officer works out what matters most for you specifically.
Your options, the tradeoffs, and your next step. No obligation to go further.
Align Lending LLC, NMLS #2041154, is a mortgage broker. Samantha Shelton, NMLS 1647301. Equal Housing Opportunity. Licensed in Michigan, Ohio, North Carolina, Florida, Louisiana and Texas. Program guidelines on this page are general and change over time, and terms vary by lender; they are not a credit decision, a preapproval, a commitment to lend, or an offer of credit. Approval depends on your full application, the property and the lender's current guidelines.
Paid on a 1099? Send me your returns and I'll show you which route fits your income.
Samantha Shelton · Broker Owner · NMLS 1647301
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Texts go to Samantha at (248) 506-5727. 7 days a week, evenings included.