A streamlined alt-doc Non-QM program qualifying based on your 1099 income — not tax returns or bank statements. Built for independent contractors, real estate agents, sales reps, financial advisors, and gig economy professionals whose 1099s tell a cleaner story than their tax returns.
A 1099 loan is a Non-QM program that qualifies independent contractors and commission earners based on the gross income reported on their 1099 forms — not tax returns. The lender takes your 1099 totals from the past 12–24 months, applies a small expense factor (typically 10–20%, vs the 50% default on bank statement loans), and uses that as qualifying income.
This is the cleanest, most efficient Non-QM doc path for borrowers whose income flows primarily through 1099 reporting: real estate agents, financial advisors, insurance agents, IT consultants, sales representatives, contractors who work for general contractors, freelance creatives, and gig economy professionals (Uber, DoorDash, etc., subject to platform-specific rules).
Compared to bank statement loans, 1099 loans typically produce 30–50% higher qualifying income for the same earner because the expense factor is lower. The 1099 form already represents net-of-business-expenses income (your gross revenue from the payer, before YOUR personal business expenses), so the lender doesn't need to apply a heavy expense haircut.
For service businesses, 1099 typically wins. Example: $300,000 in 1099 income at 15% expense factor = $255,000 qualifying. Same earner on bank statement at 50% default factor = $150,000 qualifying. The 1099 path produces $105,000 more qualifying income — often the difference between qualifying for $700K vs $1M home.
| Tier | 1099 Years | Min Credit | Max LTV — Purchase | Max LTV — Cash-Out | Typical Rate |
|---|---|---|---|---|---|
| Premium | 2 yr | 740+ | 90% | 80% | 8.000% |
| Standard | 2 yr | 700–739 | 85% | 75% | 8.250% |
| Standard | 1 yr | 700+ | 80% | 75% | 8.500% |
| Tier-3 | 2 yr | 660–699 | 80% | 70% | 8.625% |
| Subprime | 2 yr | 640–659 | 75% | 65% | 9.250%+ |
| Profession | Typical Expense Factor | Qualifying Income (% of 1099 Total) |
|---|---|---|
| Real estate agent | 10–15% | 85–90% |
| Financial advisor / broker | 10% | 90% |
| Insurance agent | 10–15% | 85–90% |
| IT consultant | 15% | 85% |
| Sales representative | 15–20% | 80–85% |
| Independent contractor (trades) | 20% | 80% |
| Freelance creative (writer, designer) | 15–20% | 80–85% |
| Uber/Lyft/DoorDash driver | 25–35% | 65–75% |
*A CPA letter attesting to a specific lower expense ratio can override the lender default. For service professions with low actual expenses, the CPA letter is worth the $300–$500 fee.
April 2026 illustrative rates. Contact Ethan for current pricing.
740 credit · 6 yrs RE · $285K 1099 in 2025
720 credit · 4 yrs · Jumbo Non-QM
700 credit · TX homestead 50(a)(6) cash-out
680 credit · 2 yrs platform · Higher expense factor
760 credit · 8 yrs · Premium tier 90% LTV
W-2 + small 1099 side income · Returns look fine
NEXA accesses 200+ wholesale lenders. Below are the top Non-QM partners for this program.
Each Non-QM lender uses different default expense factors for the same profession. Angel Oak might use 15% for an IT consultant; Newfi might use 20%. On $300K of 1099 income, that's a $15K qualifying income difference — often the difference between qualifying or not. NEXA shops Angel Oak, Newfi, Deephaven, and Flagstar simultaneously to find the lender whose expense factor methodology aligns best with your specific 1099 profile.
| Factor | 1099 Loan | Bank Statement | Conventional |
|---|---|---|---|
| Income Documentation | 1099s only | 12/24 mo statements | Tax returns + W-2 / SE |
| Tax Returns Required? | NO | NO | Yes |
| Default Expense Factor | 10–20% | 50% | N/A (uses Schedule C) |
| Typical Rate | 8.0–8.5% | 8.0–8.5% | 6.5–7.0% |
| Qualifying Income ($300K example) | $240K–$270K | $150K | Per Schedule C |
| Min Credit | 660 | 660 | 620 |
| Max LTV — Purchase | 90% | 90% | 97% |
| Best Profile | 1099 contractor, agent, advisor | Self-employed business owner | W-2 or strong returns |
1099 loans typically produce 30–50% higher qualifying income than bank statement loans for the same earner, because the expense factor is lower (1099 already nets out third-party business expenses).
Some borrowers assume their Schedule C net profit is what counts — it's not. 1099 loans use the gross 1099 amount minus a small expense factor. Schedule C net profit is typically much lower than 1099 gross because you've already deducted business expenses. Solution: Use the 1099 gross amount on your tax return reconciliation, not Schedule C line 31.
If 2024 1099 was $250K and 2025 is $200K, the lender uses the LOWER (or 2-yr average — typically the worse of the two). A declining trend can push you out of qualifying. Solution: If a temporary dip occurred, provide explanation (medical leave, market conditions, business pivot). For genuine decline, accept lower qualifying income.
You receive 1099s from 4 brokerages — total $300K. Some lenders only count one primary source unless properly aggregated. Solution: Submit all 1099s with a summary spreadsheet. Have CPA letter confirming all sources are same line of business. Some lenders require single-source income; others aggregate cleanly.
1099-K is a different form than 1099-NEC and includes gross payments processed (often inflated). A consultant who runs $400K through PayPal but actually earned $250K (rest is reimbursements) needs to reconcile. Solution: Don't use 1099-K alone — pair with detailed records showing actual earned income vs reimbursements/refunds.
1-year 1099 programs require either: (a) prior 5+ years W-2 in same field (recent transition to 1099 contractor in same industry), or (b) very high credit (740+) with strong reserves. Most lenders default to 2-year requirement. Solution: If only 1 year 1099 history, be prepared to document prior W-2 in same field, or wait 12 months for second year of 1099s.
A borrower with $80K W-2 + $120K 1099 sometimes gets W-2-only qualifying because the lender doesn't know how to blend. Solution: Use a Non-QM lender that explicitly handles blended income (Newfi, Angel Oak). Both sources count toward qualifying with proper documentation.
Default expense factors are conservative. A CPA letter attesting to the borrower's actual 5–10% expense ratio (vs default 15–20%) routinely raises qualifying income by $20K–$40K. Solution: Get a CPA letter for $300–$500 — best ROI in your loan file.
1099 cash-out on Texas homestead is still subject to 50(a)(6): 80% LTV cap, 12-day notice, 2% closing-cost cap, in-person closing, spousal joinder. Solution: Use Flagstar or Texas-experienced wholesale partner. Build 12-day notice into closing timeline.
Send Ethan your last 1–2 years of 1099s and he'll run qualifying income across lender expense factors. Quick analysis of what you can buy, at what rate.
