- Income Flexibility: Traditional mortgage lenders might find it difficult to assess a self-employed person's income due to its variability. 1099 self-employed mortgage loans use methods that better capture the financial realities of self-employment.
- Less Rigid Documentation: These loans often require less conventional documentation. This flexibility can accommodate the diverse and sometimes fluctuating income patterns of self-employed individuals.
- Customization: Lenders offering 1099 mortgage loans often have specialized programs tailored to self-employed borrowers' unique situations, providing more personalized and suitable mortgage solutions.
Best Programs for 1099 Self-Employed Borrowers
1. Bank Statement Loans: These loans use personal or business bank statements to verify income. Lenders look at deposits over a period (usually 12-24 months) to determine average monthly income.
2. P & L Program: With this program we need a P & L Statement from your accountant in lieu of tax returns which will show us the income for the borrower
3. 1099 Program: Great program for contractors and other borrowers who have different jobs during the year. For example: a construction company that does rehab work for various companies.
4. Asset Depletion Loans: For self-employed individuals with significant assets but irregular income, asset depletion loans calculate a borrower’s income based on their liquid assets divided by a set period (usually 360 months)..
Choosing the Right Program
The best program depends on individual circumstances, including income consistency, credit score, available assets, and down payment ability. Here are some steps to choose the right program:
- Evaluate Income Documentation: Determine what documentation you can provide. If you have comprehensive bank statements, a bank statement loan might be the best fit.
- Consult with Lenders: Speak to lenders specializing in self-employed mortgages. They can guide you to the best options based on your financial profile. As loan brokers we do that for you.
- Consider Terms and Rates: Compare the terms and interest rates offered by different programs. Some might have higher rates but offer more flexibility in documentation.
- Assess Your Financial Health: Ensure you have a good credit score and enough reserves to meet down payment and reserve requirements.
