This loan will approve you for more than you can afford.
A 1099 program qualifies you on your gross 1099 income minus a blanket expense factor — usually 10%. Your real expenses are whatever they actually are. When the gap is wide, the program approves a payment your bank account cannot make, and no 1099 lender will show you that number. This page shows you that number.
A 1099 income loan qualifies you on the gross income shown on your 1099 forms, minus a flat expense factor — typically 10%, sometimes 15–20%. No tax returns, no fighting over your own deductions. Because a 1099 is issued by somebody else and reported to the IRS, it is stronger third-party evidence than self-generated bank deposits, which is why 1099 programs usually price a little better than bank statement loans — around 7.90% against 8.00%, and about $281,546 above conventional on a $1M loan. Here is the part nobody mentions. That expense factor is a blanket assumption, not a fact about your business. If you gross $250,000 and the lender docks 10%, it qualifies you on $225,000. If your real expenses are 35%, you actually keep $162,500 — and the program has just approved you on $62,500 of income that does not exist in your bank account, supporting roughly $2,240 a month of payment you cannot truly make. The program is not lying. It is simply not looking. Somebody should.
What the program qualifies. And what you keep.
Two numbers, side by side. Most 1099 lenders will only ever show you the first one.
A blanket assumption. Shop it — lenders use 10%, 15% or 20% for the exact same file.
What you actually spend to earn it. This is the number the program never asks for.
Income the program credits you with that never reaches your bank account.
The program qualifies you on $225,000. You actually keep $162,500. It is about to approve you for a house you cannot afford.
One of these numbers pays your mortgage.
Green is the income that actually lands in your account. Coral is the income the program invented for you with a blanket assumption. Only one of them shows up on the first of the month.
We place 1099 loans. We would rather place you in one you can actually pay.
Illustrative only. Expense factors vary by lender — 10%, 15% and 20% are all common for the same file, and a CPA letter stating your actual expense ratio can move it. Qualifying income is not the same as approval: reserves, credit, loan-to-value and debt-to-income all matter. The payment figures here use a 43% back-end ratio as a rule of thumb; your lender's ceiling may differ. This page is not a judgement about what you can afford — only you know that. It is an attempt to show you a number the industry usually leaves out. Many Non-QM loans carry prepayment penalties. Not a commitment to lend. Equal Housing Opportunity.
Would your tax return have been cheaper?
A 1099 is a tax document. It is already on your return. So before you pay a 1.15-point premium to avoid the return, somebody should check whether the return would simply have worked — with the standard add-backs that every conventional underwriter applies.
Realtors: the standard mileage deduction is largely an add-back. It is often the single biggest number in your file, and almost nobody claims it back.
Conventional does not reach — your net plus add-backs is $200,500 against the $221,992 this loan needs. So the 1099 route is the correct one, and its premium of $281,546 is real and unavoidable.
But read this next part slowly. The program will qualify you on $225,000. You actually keep $162,500. It is prepared to approve you for roughly $2,240 a month more than your real income supports.
Do not borrow to the top of what it offers. Work out the payment from what you actually keep, not from what the formula says. That is the single most useful sentence on this page and no 1099 lender will say it to you.
From here to the keys — five steps.
No mystery, no call centre, no "we'll get back to you." Every step is exactly what happens inside it.
Four questions. No credit pull, no sign-up, no obligation.
~60 secondsWhat happensOne application goes to dozens of wholesale lenders. They compete for you.
Same dayWhat happensUnderwritten against real documents — not a soft letter any lender prints.
~24 hoursWhat happensListing agents call Adriana. She picks up. That is worth more than a bid.
Your timelineWhat happensConditions cleared, docs signed, funded. And she builds the payment from what you actually keep.
To the dateWhat happensThree 1099 earners. Two were over-qualified.
Real structures, real numbers, and what we actually told them.
The program docked 10%. Her real expenses were 42%. She nearly bought a house she could not pay for.
His mileage add-back alone brought his return above the line. Conventional at 6.75%.
Real expenses 7% against a 10% factor — the program was actually conservative for him.
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Everything people actually ask.
What is a 1099 income loan?
A Non-QM mortgage that qualifies you on the gross income shown on your 1099 forms, with a flat expense factor applied — usually 10%, sometimes 15–20%. No tax returns are required. It suits contractors, real estate agents, commissioned salespeople, consultants and gig workers whose 1099s cleanly capture what they earn.
How is it different from a bank statement loan?
A 1099 is issued by somebody else and reported to the IRS — it is third-party evidence. Bank deposits are self-generated and could be anything: a loan, a gift, money moved between your own accounts. Because the evidence is stronger, 1099 programs usually price a little better, around 7.90% against 8.00%, and require less documentation.
What does it cost compared to a conventional loan?
Roughly 1.15 percentage points, which on a $1,000,000 loan is about $281,546 in extra lifetime interest. It is one of the cheaper Non-QM products — but it is not cheap, and it is worth twenty minutes to check whether you needed it at all.
What is the 'phantom income' this page keeps mentioning?
The gap between what the program credits you with and what you actually keep. If you gross $250,000 and the lender applies a 10% factor, it qualifies you on $225,000. If your real expenses are 35%, you actually keep $162,500. The program has credited you with $62,500 that never reaches your bank account — and at a 43% ratio that supports about $2,240 a month of payment you cannot truly make.
Isn't that the borrower's problem, not the lender's?
Legally, largely yes. Which is precisely why no 1099 lender puts this calculator on their website. We put it on ours because a client who cannot make the payment is not a client for very long, and because being the only broker in California who shows you this number is worth more to us than the occasional loan it costs.
Can I lower the expense factor?
Often, yes, and it is worth real money. Lenders apply 10%, 15% or 20% to the same file depending on their own policy — so shop it. A CPA letter stating your actual expense ratio can also move it. On $250,000 of gross income, the difference between a 10% and a 20% factor is $25,000 of qualifying income and roughly $150,000 of borrowing power.
What if I'm a realtor with a big mileage deduction?
Then check conventional first, seriously. The standard mileage deduction is largely a <b>paper</b> expense — a conventional underwriter adds a substantial portion of it straight back. For high-mileage realtors it is frequently the single largest add-back in the file, and it has taken more than one of our clients off Non-QM entirely.
How much 1099 history do I need?
Usually one to two years in the same line of work. Two years is standard and gets the best pricing; some lenders will accept twelve months with compensating factors such as a larger deposit or strong reserves. A gap or a career change mid-history is the thing that most often trips people up, so raise it early rather than late.
Stop estimating. Get the real number.
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