1099 earners run into a specific version of the self-employed problem. You are not running a company with equipment and payroll — you are selling your own time — and yet underwriting treats you exactly like a business, net profit and all.
Why 1099 income is harder than it should be
- No pay stub, no employer. The two documents conventional underwriting is built around do not exist for you, so the file drops straight into self-employed guidelines.
- Your deductions are real. Mileage, equipment, phone, home office, health insurance, the self-employment tax deduction — all legitimate, all reducing the income a lender counts.
- Two-year averaging punishes growth. Contract work often scales fast. If you doubled this year, the average lands well below where you actually are.
- Client concentration gets questioned. Three big clients can read as concentration risk on a conventional file even when the income is completely steady.
- Gaps between contracts look like unemployment. To you it is a normal month between engagements. On paper it can read as instability.
What a deposit-based file changes
Twelve months of deposits show the thing you actually care about: money arrived, consistently, over a year. A three-week gap between contracts is visible in context rather than as a red flag. A ramp is visible as a ramp instead of being averaged into the prior year. And because the history is pulled directly from the bank, the period runs right up to the week you apply — your strongest recent months count.
Deposits are not credited dollar-for-dollar. An expense factor is applied to arrive at usable qualifying income, and that factor depends on which program fits your file. There is no single percentage worth quoting here, which is why the fast path to a real number is a short conversation plus a soft credit pull.
Who this covers
- Independent consultants and fractional executives
- Real estate agents and loan originators paid on 1099 commission
- Skilled trades working as subcontractors
- Freelance designers, developers, writers and creators
- Owner-operators in trucking and delivery
- Rideshare, delivery and platform earners with consistent deposit history
- Traveling healthcare professionals and per-diem clinicians
What the line looks like
Fixed rate, locked at each draw, on a 10, 15, 20 or 30-year term. Fully amortized — principal and interest from the first payment, no interest-only stretch and no balloon. Interest accrues daily on the outstanding balance only, and there is no prepayment penalty, which matters when your income arrives unevenly: pay it down hard in a strong quarter and you immediately pay less interest.
The line can sit in first, second or third position, so an existing mortgage keeps its rate. Lines run $25,000 to $750,000, with most up to $400,000 closing without an appraisal appointment. Available on properties in 30 states; not New York, and Texas follows its own home-equity rules and a longer timeline.
Common questions
Do I need an LLC or S-corp to qualify?
No. Sole proprietors with no entity at all are fine. What matters is 12 months of deposit history showing contract income arriving in an account you control.
What if I have both W-2 and 1099 income?
Common, and workable. Mixed income files get structured differently depending on the split, so mention both at the start rather than leading with whichever half seems stronger.
I have only been contracting for a year. Is that enough?
It depends on the program and on what you were doing before — prior work in the same field can matter. Worth a direct conversation rather than assuming either way, and the soft pull that goes with it does not affect your score.
Does a gap between contracts disqualify me?
Not by itself. Twelve months of history shows the pattern around the gap, which is the context a single averaged income figure on a tax return throws away.