Alternative income
1099 Borrower Financing
Independent contractors get treated like small businesses by conventional underwriting, which often understates what they actually earn.
Quick Answer
A 1099 income loan qualifies independent contractors using the gross income reported on their 1099 forms, with a program-defined expense factor applied, instead of using net income after Schedule C deductions. This can produce materially higher qualifying income for contractors who write off aggressively. The number of years required, the expense factor used, and whether year-to-date documentation is needed vary by program.
The problem with standard documentation
Conventional guidelines average contractor income across a documented history and subtract deductible business expenses. For a contractor with meaningful write-offs or a rising income trend, that math can produce a qualifying figure well below reality. Programs built specifically around 1099 income take a different approach to the same file.
Who this fits
- Independent contractors paid on 1099 rather than W-2
- Commission-only sales professionals
- Gig and platform workers with steady deposit history
- Borrowers whose income rose recently and whose two-year average lags behind