Home Loans for Self Employed and 1099 Income Borrowers
If you are paid with 1099 income or are self employed and don’t qualify for a Conventional, FHA or VA home loans, don’t give up. There are loan product options for outside the normal, everyday W-2 income earners.
1099- For borrowers paid with commissions or as an independent contractor. They receive 1099(s) for each year.
This loan product can be used for primary, vacation or investment homes. The minimum loan amount is $100,000. Gift funds are allowed once the borrower contributes 5% of the purchase price. Sellers can help with closing costs up to 3%.
The income will need to be documented for a two year period but may still qualify if the borrower changed from W-2 income to 1099 income during the last 24 months if in a similar type of work.
Some examples of what this loan can be used for: Primary home purchase, 90% loan to value, up to 50% debt to income and 680+ credit score.
Self-employed - Borrowers can qualify for loans the same as W-2 earners in regards to loan to value, debt to income ratio and credit scores. The only difference is in calculating the income. The allowable income on a Schedule C is the net profit plus depreciation, business use of home, and some mileage.
Self-employed using bank statements- This loan is based on using the deposits on bank statements over the last 12 or 24 months; personal or business. One of the borrowers must earn the primary income through self-employment. And that borrower must own 25% or more of the business.
Gift funds are allowed once the borrower puts 5% into the transaction. Sellers can contribute up to 3% of the purchase price toward the borrower’s closing costs.
Examples of how this loan can be used: Primary home purchase, 90% loan to value, up to 50% debt to Income ratio, and 660+ credit score. Primary Rate/Term refinance, 85% loan to value and, 660+ score. Vacation or investment home purchase and rate term refinance, 80% loan to value, 50% debt to income, and 680+ credit score.
There are many ways to structure a loan. Speak with a seasoned Mortgage Broker when you are considering one of the most expensive purchases in your lifetime.
JoAnn Moore, Licensed Mortgage Loan Originator, NMLS #165477. The Mortgage Matket of Delaware, LLC is a mortgage brokerage covering the State of Delaware. Office 302.855.1306, Cell 302.236.1229. MMODJoAnn@aol.com.
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