Options for 800+ credit score 1099nec loan
Member since 2020 · 146 posts · 39 votes
Options for 800+ credit score 1099nec loan
Most Popular Reply
Christian TurnerPro Member
Lender · Coral Gables, FL · Member since 2026 · 20 posts · 5 votesJimmy, broker here. A few things to check before you sign either one, because with an 800 score you have more leverage than that first quote suggests.
On the Wells file: they'll underwrite to the net on your Schedule C, not the 1099 gross, and they can only add back depreciation, depletion, business use of home and a few line items. If your write-offs were real expenses, expect the approval to shrink or die in underwriting; a pre-approval based on 1040s they hadn't fully read isn't worth much. Ask the LO for the actual qualifying income number today rather than waiting.
On the 1099 program: it's the right lane for you, and 10% down with no MI is normal for it. Three things to compare between brokers: (1) the expense factor applied to your 1099 gross (10% is typical, some lenders allow a CPA letter for less); (2) points and lender credits on the Loan Estimate, since the rate alone tells you nothing; (3) confirm in writing there's no prepayment penalty, which there shouldn't be on a primary residence. With your credit you should be at the top tier for pricing; if a broker can't show you the pricing grid, that's a tell.
Then plan the exit: after a year of cleaner returns, a rate-and-term refi to conventional usually pays for itself. Happy to run a second opinion, no obligation.
19 Replies
- 3wDerek BrickleyBusiness MemberLender · Ann Arbor, MI · Member since 2021 · 663 posts · 226 votes
Hey Jimmy!
That sounds about right really, 1099 or bank statement is treated pretty similar. The main difference on that would be your costs, not sure what price range you're looking in or what those look like with what you're seeing now. If it's helpful to look at some other possible options, feel free to reach out!
Gold Star Mortgage Financial Group547 Reviews - 3wRay WilliamsBusiness MemberLender · Denver, CO · Member since 2017 · 148 posts · 68 votes
Jimmy, the good news is you are not actually looking at two different levels of scrutiny here, just two different ways of counting your income. A conventional loan through Wells Fargo will use your net income off Schedule C after all those write offs, averaged over the two years, so yes, they will see the deductions and your DTI gets calculated off that lower number. That is exactly the problem the 1099 income program is built to solve. Most 1099 only programs use your gross 1099 earnings with a flat expense factor, often somewhere around 10 to 25 percent depending on the lender, instead of your actual tax return deductions, which is why someone with heavy write offs can qualify for a lot more house on paper even though the rate runs higher than a conventional 30 year.
The 7.99 percent with no MI and 10 percent down is a fairly normal structure for that kind of program right now. Before you pick a lane, ask both lenders to show you the actual DTI they are using and the full payment breakdown side by side, not just the rate. A lower rate on paper does not always win if the underlying income calculation caps how much you can actually borrow. If Wells Fargo comes back and still qualifies you at a payment you are comfortable with using your real tax returns, that route usually saves money over time since you are not paying the non-QM rate premium. - 3wGregory AcsPro MemberLender · MD · Member since 2025 · 133 posts · 52 votes
With your credit score, I’d make sure you’re comparing the total cost of each loan rather than just the approval itself. If a conventional loan is still possible, it’s worth waiting to see what underwriting comes back with before deciding a non-QM option is your only path. If it does come down to a 1099 or bank statement loan, I’d compare the rate, lender fees, reserve requirements, and any prepayment penalties so you understand the full picture instead of focusing on one feature.
- 3wErik EstradaBusiness MemberLender · Member since 2022 · 6k+ posts · 1k+ votes
Quote from @Jimmy Rojas:
I tried to get a home loan with my past 2yrs 1040s but since im 1099 and did a whole bunch of writeoffs prior looking for a home, broker said my only option now is bank statement or 1099 loan, he explained how the 1099 route is much simpler as with bank statements its a lot of paper work and can get messy, i got offered 10 percent down and does not have mortgage insurance,The Estimated monthly payment at the 7.99% rate was 2087.66, the estimate Cash to close was 36k.
I think im going to shop with another broker, my initial loan application was with wells fargo, but for them i used only my past 2yrs 1040s and they know im 1099, they already gave me a pre approval as well, i bit better than the brokers but waiting for them to contact me with the results from underwriting, most likely they will see my tax write offs too but im still optimistic lol.
There are many programs for self-employed borrowers. P&L, Bank Statement, 1099 Only, Asset Depletion etc.. If your goal is purely to chase the lowest rate, you might want to try doing a 1 year tax return loan and planning to file accordingly for this coming year. You may need to strategize with a tax planner/CPA and a good broker familiar with all avenues.
Good luck!
LuxePrivate Investments LLC 572 Reviews - Investor · Pacific Northwest · Member since 2026 · 511 posts · 287 votes3w
The first thing I’d separate here is credit qualification from income qualification.
An 800+ credit score is fantastic, but it doesn’t solve the specific problem your broker is running into.
You’re essentially saying:
“I earn considerably more money than my tax returns make it look like I earn.”
Which is extremely common with self-employed people.
The problem is that conventional underwriting generally doesn’t get to say, “Yeah, we believe you.”
It has to calculate qualifying income according to the documentation and underwriting rules.
That said, before I jumped straight into a 7.99% 1099 loan, I’d want somebody to actually show me the income calculation they did from your returns.
Because not every tax deduction necessarily reduces qualifying mortgage income dollar-for-dollar.
There are legitimate add-backs and adjustments in self-employed underwriting.
Things like depreciation, certain amortization, business use of home and some other non-cash/qualifying adjustments can potentially be treated differently in the mortgage cash-flow analysis.
So my first question to the broker would be:
“Can you send me the actual income worksheet showing exactly how you calculated my qualifying monthly income from my returns?”
Not just:
“You wrote off too much, so you don't qualify.”
Show me the math.
That might confirm that conventional financing really doesn't work.
But I’d want to know that before paying non-QM pricing for the next 30 years.
I would absolutely shop this
Not because the 7.99% offer is automatically bad.
The interesting part of your offer is actually:
10% down + no mortgage insurance.
Depending on purchase price, points, fees and the alternative conventional structure, that could be more competitive than it initially looks.
But you can't compare these loans based only on rate.
I'd get competing Loan Estimates and compare:
- Interest rate
- APR
- Lender/origination fees
- Discount points
- Cash to close
- Monthly principal + interest
- Mortgage insurance, if any
- Prepayment penalty
- Fixed vs adjustable rate
- How long the rate is fixed
- Any balloon feature
- Reserve requirements
- Whether there are unusual non-QM terms
- Total cost over the period you realistically expect to own the home/keep the loan
That last one matters.
If you think you'll refinance in 2–3 years, the lowest 30-year rate isn't necessarily the cheapest loan.
A lender could offer you a pretty-looking rate and bury $10k of additional cost upfront.
I'd also let Wells Fargo finish underwriting before assuming they're dead
A preapproval isn't a final approval, obviously.
But if they've already reviewed enough information to issue one, I wouldn't kill that path prematurely.
Let underwriting tell you exactly what they will or won't accept.
Worst case, they reach the same conclusion as the broker.
Best case, their calculation of your income works.
There’s basically no upside to rejecting yourself before the underwriter does.
Then I'd probably talk to at least 2–3 more lenders
And I wouldn't just ask:
“Can you beat 7.99%?”
I'd tell them exactly what the problem is:
That forces them to solve the financing problem instead of simply quoting another version of the same loan.
I'd specifically look for somebody who does a lot of self-employed borrower files.
The person matters here.
There are loan officers who see a Schedule C and start sweating, and there are loan officers who work with business owners all day and understand exactly how to analyze one.
Bank-statement versus 1099 loan
I wouldn't choose the 1099 program just because somebody says the bank-statement loan has more paperwork.
You're borrowing hundreds of thousands of dollars.
I'll deal with some paperwork if it materially improves the economics.
The question isn't:
Which loan is easiest to document?
It's:
Which loan gives me the best combination of approval certainty, cash required and total borrowing cost?
If the 1099 loan wins that comparison, great.
Take it.
If providing 12 or 24 months of statements saves you meaningful money, I'd happily spend an afternoon downloading PDFs.
One other option nobody likes talking about
Run the numbers on waiting.
Not because I necessarily think you should.
But because it creates a benchmark.
If your current tax year is substantially stronger from a mortgage-qualifying-income standpoint, ask:
What financing would I likely qualify for after the next return is filed?
Then calculate the cost of buying now using non-QM financing versus waiting and potentially qualifying conventionally.
Sometimes buying now is obviously worth the financing premium.
Sometimes somebody is about to spend tens of thousands of dollars over the first several years of a mortgage because they don't want to wait six months.
That's an economic decision, not an emotional one.
And going forward, coordinate taxes and borrowing
This is one of those weird lessons self-employed people eventually learn:
The tax return and the mortgage application are looking at your business from opposite directions.
Your tax strategy wants taxable income low.
Your mortgage application wants qualifying income high.
Neither objective is wrong.
But if you know you want to buy real estate in the next 12–24 months, your CPA and mortgage professional should know that before the return gets filed.
Saving $10,000 in taxes isn't necessarily a great victory if it prevents you from qualifying for the financing you need.
That doesn't mean stop taking legitimate deductions.
It means understand the downstream effect of the decisions you're making.
Personally, with 800+ credit, I would not be panicking at all.
I'd be shopping aggressively.
Let Wells finish underwriting.
Get the actual self-employed income calculation.
Have another conventional lender independently run the file.
Then get at least two alternative-documentation quotes and compare the entire transaction, not just the interest rate.
If 7.99%, 10% down and no MI is still the winner after all of that, then you've got your answer.
But I'd make the market prove that's your best option before accepting that it's your only option.
- Member since 2020 · 146 posts · 39 votes3w
Quote from @Michael Eskenasy:
The first thing I’d separate here is credit qualification from income qualification.
An 800+ credit score is fantastic, but it doesn’t solve the specific problem your broker is running into.
You’re essentially saying:
“I earn considerably more money than my tax returns make it look like I earn.”
Which is extremely common with self-employed people.
The problem is that conventional underwriting generally doesn’t get to say, “Yeah, we believe you.”
It has to calculate qualifying income according to the documentation and underwriting rules.
That said, before I jumped straight into a 7.99% 1099 loan, I’d want somebody to actually show me the income calculation they did from your returns.
Because not every tax deduction necessarily reduces qualifying mortgage income dollar-for-dollar.
There are legitimate add-backs and adjustments in self-employed underwriting.
Things like depreciation, certain amortization, business use of home and some other non-cash/qualifying adjustments can potentially be treated differently in the mortgage cash-flow analysis.
So my first question to the broker would be:
“Can you send me the actual income worksheet showing exactly how you calculated my qualifying monthly income from my returns?”
Not just:
“You wrote off too much, so you don't qualify.”
Show me the math.
That might confirm that conventional financing really doesn't work.
But I’d want to know that before paying non-QM pricing for the next 30 years.
I would absolutely shop this
Not because the 7.99% offer is automatically bad.
The interesting part of your offer is actually:
10% down + no mortgage insurance.
Depending on purchase price, points, fees and the alternative conventional structure, that could be more competitive than it initially looks.
But you can't compare these loans based only on rate.
I'd get competing Loan Estimates and compare:
- Interest rate
- APR
- Lender/origination fees
- Discount points
- Cash to close
- Monthly principal + interest
- Mortgage insurance, if any
- Prepayment penalty
- Fixed vs adjustable rate
- How long the rate is fixed
- Any balloon feature
- Reserve requirements
- Whether there are unusual non-QM terms
- Total cost over the period you realistically expect to own the home/keep the loan
That last one matters.
If you think you'll refinance in 2–3 years, the lowest 30-year rate isn't necessarily the cheapest loan.
A lender could offer you a pretty-looking rate and bury $10k of additional cost upfront.
I'd also let Wells Fargo finish underwriting before assuming they're dead
A preapproval isn't a final approval, obviously.
But if they've already reviewed enough information to issue one, I wouldn't kill that path prematurely.
Let underwriting tell you exactly what they will or won't accept.
Worst case, they reach the same conclusion as the broker.
Best case, their calculation of your income works.
There’s basically no upside to rejecting yourself before the underwriter does.
Then I'd probably talk to at least 2–3 more lenders
And I wouldn't just ask:
“Can you beat 7.99%?”
I'd tell them exactly what the problem is:
That forces them to solve the financing problem instead of simply quoting another version of the same loan.
I'd specifically look for somebody who does a lot of self-employed borrower files.
The person matters here.
There are loan officers who see a Schedule C and start sweating, and there are loan officers who work with business owners all day and understand exactly how to analyze one.
Bank-statement versus 1099 loan
I wouldn't choose the 1099 program just because somebody says the bank-statement loan has more paperwork.
You're borrowing hundreds of thousands of dollars.
I'll deal with some paperwork if it materially improves the economics.
The question isn't:
Which loan is easiest to document?
It's:
Which loan gives me the best combination of approval certainty, cash required and total borrowing cost?
If the 1099 loan wins that comparison, great.
Take it.
If providing 12 or 24 months of statements saves you meaningful money, I'd happily spend an afternoon downloading PDFs.
One other option nobody likes talking about
Run the numbers on waiting.
Not because I necessarily think you should.
But because it creates a benchmark.
If your current tax year is substantially stronger from a mortgage-qualifying-income standpoint, ask:
What financing would I likely qualify for after the next return is filed?
Then calculate the cost of buying now using non-QM financing versus waiting and potentially qualifying conventionally.
Sometimes buying now is obviously worth the financing premium.
Sometimes somebody is about to spend tens of thousands of dollars over the first several years of a mortgage because they don't want to wait six months.
That's an economic decision, not an emotional one.
And going forward, coordinate taxes and borrowing
This is one of those weird lessons self-employed people eventually learn:
The tax return and the mortgage application are looking at your business from opposite directions.
Your tax strategy wants taxable income low.
Your mortgage application wants qualifying income high.
Neither objective is wrong.
But if you know you want to buy real estate in the next 12–24 months, your CPA and mortgage professional should know that before the return gets filed.
Saving $10,000 in taxes isn't necessarily a great victory if it prevents you from qualifying for the financing you need.
That doesn't mean stop taking legitimate deductions.
It means understand the downstream effect of the decisions you're making.
Personally, with 800+ credit, I would not be panicking at all.
I'd be shopping aggressively.
Let Wells finish underwriting.
Get the actual self-employed income calculation.
Have another conventional lender independently run the file.
Then get at least two alternative-documentation quotes and compare the entire transaction, not just the interest rate.
If 7.99%, 10% down and no MI is still the winner after all of that, then you've got your answer.
But I'd make the market prove that's your best option before accepting that it's your only option.
Yes, the only person who gave me a pre approval with alsmot %8 is this one broker, i will email wells fargo today for some updates on their underwriting, im also working with a zillow broker and lastly this other broker from L.A who is a bit aggressive and pushy for my liking but he is an option too.
- 3wAaron ZimmermanBusiness MemberAccountant · Chicago, IL · Member since 2018 · 2k+ posts · 1k+ votes
Is the 7.99% fixed for 30 years? If.no, I'd be evaluating interest rate risk and ultimately trying to refinance down the road once you show higher income. What I tell clients all the time is that it's great to write off income but if you can't qualify for a loan, then it's not a win.
Brick House CPAs53 Reviews - 3wAshish AcharyaBusiness MemberCPA, CFP®, PFS · FL · Member since 2017 · 5k+ posts · 3k+ votes
The bigger issue here is that your tax strategy and your borrowing strategy are pulling in opposite directions.
When you’re self-employed, aggressive deductions can absolutely reduce taxable income, but they can also make your income look weaker on paper when a lender is relying on your tax returns. That’s why I’d start planning for the next purchase or refinance before the next return is filed, not after.
If you know you may need financing in the next 12–24 months, it can make sense to model two scenarios: one that maximizes deductions and another that preserves more qualifying income. Sometimes the tax savings from taking every available write-off are worth it. Other times, showing stronger income can create more value if it helps you qualify for better financing or a larger purchase.
I’d also be careful assuming every 1099-based loan treats income the same way. Some programs use 1099 income differently from traditional tax-return underwriting and may apply their own expense factors or documentation requirements, so the exact treatment matters.
The key takeaway is that tax planning should account for your financing goals. Your CPA should know you’re planning to buy before the return is prepared so the deduction strategy and lending timeline can be evaluated together.
Happy to connect!
INVESTOR FRIENDLY CPA®5241 Reviews - 3wJesus SuarezBusiness MemberLender · TX, FL · Member since 2025 · 131 posts · 54 votes
It definitely doesn't hurt to keep shopping around while waiting on Wells Fargo, but make sure you're working with a broker who truly specializes in self-employed / Non-QM borrowers.
Every Non-QM lender has vastly different guidelines, expense-ratio deductions, and pricing for 1099 and bank statement programs. A seasoned broker who knows the self-employed space inside and out will shop dozens of investors to find the lowest rate and easiest paperwork—not just hand you the first option that sounds okay.
Keep your optimistic mindset, but definitely get a second opinion from a broker who lives and breathes 1099 loans!
- Banker · MA · Member since 2026 · 120 posts · 31 votes3w
Wells Fargo is going to see the same adjusted gross income the broker saw, so that pre-approval is likely to get revised once underwriting pulls the full returns. The 1099-only product your broker quoted actually makes sense for your situation: lenders using that method calculate income directly from the 1099s (usually a one or two year average) without penalizing you for Schedule C deductions, and 10% down with no MI on an 800+ score is a reasonable structure. The rate is on the higher end because it's a non-QM product, that's just the tradeoff for using an alternative income doc method. Shopping is fine, but compare offers on the same product type or you're not really comparing the same thing.
James Driscoll
- Investor · Pacific Northwest · Member since 2026 · 511 posts · 287 votes3w
That’s actually a pretty good position to be in — you’ve got multiple paths alive at the same time.
I’d let all of them finish the work before making a decision, but I’d be careful with the pushy broker.
A mortgage is too expensive a transaction to let somebody create artificial urgency. If he has the best loan, he should be able to prove it on paper.
Once Wells and the other brokers give you actual terms, get the Loan Estimates next to each other and compare them line by line.
Rate, points, lender fees, cash to close, monthly payment, prepayment penalty, and exactly how each one calculated your income.
At that point the personality of the broker matters a lot less because the numbers can compete against each other.
And if somebody is pressuring you to commit before you’ve seen the competing written offers, that would make me more cautious, not less.
- Lender · Peoria, AZ · Member since 2026 · 16 posts · 6 votes3w
Two different income calculations here. If Wells is in underwriting on 1040s, they're using taxable income after write-offs, which is why a 1099 or bank-statement quote can show more buying power. Bank-statement programs typically use 12 or 24 months of deposits (business or personal) and often want two years self-employed, or one year if it's the same line of work. The ~10% down / no MI structure is a different product than conventional QM, so you are not comparing the same loan. Worth asking both how they counted income, whether the Non-QM has a prepay penalty, and whether Wells can actually approve the 1040 income before you pay for a second appraisal. I'm a loan officer licensed in Arizona.
- Member since 2020 · 146 posts · 39 votes3w
Quote from @Joe Piccirello:
Two different income calculations here. If Wells is in underwriting on 1040s, they're using taxable income after write-offs, which is why a 1099 or bank-statement quote can show more buying power. Bank-statement programs typically use 12 or 24 months of deposits (business or personal) and often want two years self-employed, or one year if it's the same line of work. The ~10% down / no MI structure is a different product than conventional QM, so you are not comparing the same loan. Worth asking both how they counted income, whether the Non-QM has a prepay penalty, and whether Wells can actually approve the 1040 income before you pay for a second appraisal. I'm a loan officer licensed in Arizona.
Thanks for the tips, i have not heard from Wells fargo yet, but i think once i goes through underwriting they will see im not approved because, of my tax write offs. Im currently working with 2 brokers that work with 1099 and bank statement loans,one of them already gave me a pre approval, ill make sure to ask those questions you mentioned.
- Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes3w
Quote from @Jimmy Rojas:
I tried to get a home loan with my past 2yrs 1040s but since im 1099 and did a whole bunch of writeoffs prior looking for a home, broker said my only option now is bank statement or 1099 loan, he explained how the 1099 route is much simpler as with bank statements its a lot of paper work and can get messy, i got offered 10 percent down and does not have mortgage insurance,The Estimated monthly payment at the 7.99% rate was 2087.66, the estimate Cash to close was 36k.
I think im going to shop with another broker, my initial loan application was with wells fargo, but for them i used only my past 2yrs 1040s and they know im 1099, they already gave me a pre approval as well, i bit better than the brokers but waiting for them to contact me with the results from underwriting, most likely they will see my tax write offs too but im still optimistic lol.
Self employed benefit from owner financing, subject to and lease options in buying properties.
If your income is enough to safely go that route, that's what I'd do (and have been doing for years)..
- Member since 2020 · 146 posts · 39 votes3w
Quote from @Ken M.:
Quote from @Jimmy Rojas:
I tried to get a home loan with my past 2yrs 1040s but since im 1099 and did a whole bunch of writeoffs prior looking for a home, broker said my only option now is bank statement or 1099 loan, he explained how the 1099 route is much simpler as with bank statements its a lot of paper work and can get messy, i got offered 10 percent down and does not have mortgage insurance,The Estimated monthly payment at the 7.99% rate was 2087.66, the estimate Cash to close was 36k.
I think im going to shop with another broker, my initial loan application was with wells fargo, but for them i used only my past 2yrs 1040s and they know im 1099, they already gave me a pre approval as well, i bit better than the brokers but waiting for them to contact me with the results from underwriting, most likely they will see my tax write offs too but im still optimistic lol.
Self employed benefit from owner financing, subject to and lease options in buying properties.
If your income is enough to safely go that route, that's what I'd do (and have been doing for years)..
This only works only if seller want to be the bank, for single family houses its like finding a needle in a hay stack, right now i think my only option is bank statement or 1099 loan, i can always refi the intrest rate later on.
- 3wDan HandfordPro MemberInvestor · Lexington, SC · Member since 2018 · 779 posts · 501 votes
Jimmy, shopping the file makes sense, but compare more than the quoted rate and down payment. Ask each lender for the same scenario in writing, including lender fees, points, prepayment terms, reserve requirements, how 1099 income is calculated, and what documentation could change the approval before closing. A preapproval based on limited information is useful, but the underwritten income calculation is what matters. I would also keep enough liquidity after closing so the lower down payment does not leave you without reserves.
- 3wNicholas FloydBusiness MemberNY · Member since 2026 · 166 posts · 56 votes
With 1099 income, the tax write-offs can definitely make conventional underwriting tougher because they reduce the income showing on paper. Shopping a few different lenders makes sense because bank-statement and 1099 programs can vary quite a bit. I’d compare the full picture—not just the rate, but cash to close, points, reserves, and loan terms. With an 800+ score, you’re in a strong position to explore options. And if part of the concern is keeping more cash available for your business, it may also be worth looking at separate business funding options for legitimate business expenses rather than tying up all of your liquidity in the purchase.
- Lender · Peoria, AZ · Member since 2026 · 16 posts · 6 votes3w
Jimmy - one more thing worth doing while you wait on Wells: ask each of the two brokers whether their 1099 program has a prepayment penalty and how many months of reserves they want, since those two items move cash to close and flexibility more than the headline rate. Also ask them to put both offers on Loan Estimates issued the same day, because pricing floats and comparing LEs from different days is not apples to apples. I'm a loan officer licensed in Arizona.
- 1dChristian TurnerPro MemberLender · Coral Gables, FL · Member since 2026 · 20 posts · 5 votes
Jimmy, broker here. A few things to check before you sign either one, because with an 800 score you have more leverage than that first quote suggests.
On the Wells file: they'll underwrite to the net on your Schedule C, not the 1099 gross, and they can only add back depreciation, depletion, business use of home and a few line items. If your write-offs were real expenses, expect the approval to shrink or die in underwriting; a pre-approval based on 1040s they hadn't fully read isn't worth much. Ask the LO for the actual qualifying income number today rather than waiting.
On the 1099 program: it's the right lane for you, and 10% down with no MI is normal for it. Three things to compare between brokers: (1) the expense factor applied to your 1099 gross (10% is typical, some lenders allow a CPA letter for less); (2) points and lender credits on the Loan Estimate, since the rate alone tells you nothing; (3) confirm in writing there's no prepayment penalty, which there shouldn't be on a primary residence. With your credit you should be at the top tier for pricing; if a broker can't show you the pricing grid, that's a tell.
Then plan the exit: after a year of cleaner returns, a rate-and-term refi to conventional usually pays for itself. Happy to run a second opinion, no obligation.
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