1099 Wage Earner Guidelines on Home Mortgages
This article will cover 1099 wage earner guidelines on home mortgages. Whether you are getting an FHA, USDA, VA, or conventional loan, all lenders will go by the same mortgage process regarding income and employment. Independent Contractors and 1099 Wage Earner Guidelines can qualify for a home.
Workers must have at least two years working as independent contractors and 1099 wage earners. 1099 wage earner guidelines are the same as self-employed borrowers.
1099 wage earners get to deduct many unreimbursed business expenses, which is great in not paying as much taxes to the government. However, it is not good when they need to apply for a mortgage. The following paragraphs discuss the 1099 wage earner guidelines on home mortgages.
How Mortgage Underwriters Calculate Income
Mortgage underwriters will thoroughly review the borrower’s two years of income tax returns. Declining income will be closely scrutinized. Major fluctuations in income will also be a concern for underwriters. Dale Elenteny of Non-QM Mortgage Brokers explains how mortgage underwriters calculate income:
Mortgage underwriters want to see increasing income and a continuation of income for the next three years. The qualified income mortgage underwriters will go off the adjusted gross income after all unreimbursed business expenses.
Non-QM Mortgage Brokers is a national mortgage company with no lender overlays that are experts in helping independent contractors and 1099 workers qualify for a home mortgage.
1099 Wage Earner Guidelines on How Underwriters Calculate Income
Many 1099 and self-employed homebuyers cannot qualify for a home mortgage mainly due to the large unreimbursed business expenses they expense on their income tax returns. By doing so, the adjusted gross income gets greatly reduced, affecting qualified income. John Strange of Non-QM Mortgage Brokers explains how mortgage underwriters calculate 1099 income for borrowers as follows:
1099 wage earners can use non-occupant co-borrowers if they have high debt-to-income ratios. Non-QM Mortgage Brokers has alternative finance programs, such as non-QM loans for self-employed borrowers.
No income tax returns are required on bank statement loans for self-employed borrowers. 12 or 24 months of bank statement deposits are averaged, and that figure is used as the qualified income.
1099 Wage Earner Guidelines and Challenges
1099 wage earners and self-employed borrowers benefit from writing unreimbursed business expenses off their income tax returns. Therefore, they benefit from not paying as much taxes. Michael McCue of Non-QM Mortgage Brokers explains how 1099 wage earners have to deal with when lenders calculate their income as follows:
Many independent contractors can report a lower reported income and often a loss. On the flip side, this hurts them when they apply for a mortgage with such low income. Workers at restaurants, casinos, Nevada’s brothels, and self-employed workers often get tips or paid in cash.
Government and conventional loans and other home mortgage programs go off the adjusted gross income after unreimbursed business expenses. Many workers in the construction and sales fields are 1099 independent contractors.
Common Independent Contractor Jobs
Common jobs that pay workers via 1099 versus W-2 are the following:
- Real estate agents
- Consultants
- Car Sales People
- Homebuilders
- Carpenters
- Masonry workers
- Electricians and Plumbers
- Restaurant personnel
- Casino workers
- Licensed wage earners from Nevada’s Brothels
- Construction subcontractors
There are strict labor laws on who can be classified as independent contractors versus employees (W-2 wage earners).
1099 Wage Earner Guidelines Versus W2 Income Mortgage Guidelines
It is easy to calculate income for W2 wage earners. Lenders will go off by whatever the salary or wage is on the employment offer letter. W2 income wage earners can qualify for W2 income-only mortgages. Michael McCue of Non-QM Mortgage Brokers explains how 1099 wage earners have to deal with when lenders calculate their income as follows:
No income tax returns are required; only the W2 income will be used for qualification. If independent contractors cannot qualify for government and conventional loans due to many write-offs, they may need to consider adding non-occupant co-borrowers to qualify.
Borrowers with insufficient adjusted gross income on their income tax returns may need to seek alternative home mortgage programs such as the bank statement loan program offered at Non-QM Mortgage Brokers.
Mortgage Loans For Cash Income Wage Earners
To qualify for a mortgage with a national mortgage company licensed in multiple states, don’t hesitate to contact us at Non-QM Mortgage Brokers at 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com. The team at Non-QM Mortgage Brokers is available seven days a week, evenings, weekends, and holidays.
