Applicants who receive a 1099 from an employer as they receive income in either the form of commissions or as an independent contractor.
YES, to Employees who receive 1099
Can 1099 Workers Qualify for Mortgages?
Yes. Instead of Tax Returns, MCF Mortgage uses the actual wages from the 1099 form as qualifying income for the loan.
What documentation is required for 1099 loans?
Documentation for the 1099 mortgage is quite minimal, but includes:
1099 for the last two years from the same employer -- Stability is the key for a mortgage approval.
Paystub showing year-to-date (YTD) income -OR- acknowledgement from the employer that their 1099 income matches what they report helps us to know they can afford the loan. If they do not have a YTD paystub, a written verification of employment (VOE) will work.
Proof that they do not have mandatory expenses - mandatory job expenses differ from optional expenses they write off.
Letter from their certified public accountant (CPA) regarding their expenses - most 1099 contractors have expenses - it comes with the territory.
What reserve requirements are there for 1099 loans?
All borrowers, regardless of their credit score, need 3 months of reserves on hand. Reserves are money they have available (liquid assets) after they pay their down payment and closing costs. It is like an emergency account, letting us know they can cover at least 3 months of mortgage payments if something happens.
To qualify, they will need 3 months principal, interest, real estate taxes, homeowner's insurance, and HOA dues in a liquid account such as checking savings, CDs, or liquid investments.
Why choose a 1099 loan?
If you are a contractor, salesperson, or consultant, you deserve a mortgage just as much as someone with a salaried (W-2) position. If they can prove they can afford the loan and their income is steady, they deserve the same loan treatment.
The 1099 Income Program makes it a lot easier to secure a mortgage despite working as a 1099 employee. With no prepayment penalties on owner-occupied homes or second homes and the allowance of up to 6% of the purchase price for closing costs from interested parties, we make it easy to secure financing to buy a home as a 1099 employee.