A 1099 income loan helps self-employed workers qualify for mortgages. Conventional lenders don’t do a good enough job serving independent contractors and small business owners. Some applicants make enough money to keep up with monthly payments, but not all 1099 income shows up as taxable income. Self-employed workers can use more parts of the tax code than W-2 employees to reduce their taxable income. While this strategy saves money, it comes at an unfair cost—the discrepancy between earned income and taxable income results in some self-employed workers getting undeserved loan rejections. Borrowers can use mortgage brokers to increase their likelihood of getting approved, but a lower taxable income will still result in higher interest rates.

1099 income loans solve this problem by using 1099 forms as qualifiers instead of tax returns. This approach helps borrowers show more of their earnings and demonstrate a steady income. Mortgage lenders that offer 1099 income loans can put borrowers in a better position to obtain mortgages at reasonable rates. You can also get lower interest rates, substantially reducing the amount you will pay in the long run. Higher earnings reduce the mortgage lender’s risk, making you a more desirable applicant.