Home loans
Investor loans
Equity & retirement
Eligibility and availability vary by program and borrower. All loans are subject to approval.
Home / Guides / Self-Employed and 1099 Mortgages
Purchase or refinance · 220+ lenders
If you are self-employed, a 1099 contractor, or a business owner, the question is usually not "can a self-employed person get a mortgage?" It is "which income figure will the lender use, and which documents will they want?" For FHA and conventional loans, that figure is typically net income after expenses, from your tax returns. When write-offs make that number look smaller than what you actually live on, a bank-statement loan can be a better fit. We shop both paths across 220+ wholesale lenders.
Illustrative only. Documentation and guidelines vary by loan type and lender. All loans subject to approval.
Search data shows people asking "mortgage self employed gross or net" and "1099 mortgage loans." Those are the questions we answer here, from official Fannie Mae and HUD rules, plus the Non-QM alternative our Non-QM page already covers.
On FHA and Fannie Mae loans, self-employment income is calculated from tax returns, after business expenses. A high gross on a 1099 or a Schedule C is not, by itself, the qualifying number.
FHA may consider one to two years of self-employment if you were in the same or a related line of work for at least two years before that. Fannie Mae may consider less than two years when the most recent returns show a full 12 months and prior income is documented.
Non-QM bank-statement loans can use business or personal deposits to show income instead of tax returns. See Self Employed and Non-QM and what is a bank-statement loan.
Agency loans and Non-QM both have paths for a home you live in. For a rental, also see DSCR loans, which look at the property's rent rather than your personal income.
Jerry Kindig is licensed in Arizona (NMLS #2397823) and works with self-employed buyers across the state, including contractors, owner-operators, and 1099 professionals in the Phoenix area and beyond.
Agency and Non-QM guidelines vary by investor. We compare across 220+ wholesale lenders so one "no" is not the end of the conversation.
These are the official rules, not lender folklore. Lenders can still add overlays.
Fannie Mae's Selling Guide (B3-3.5-01, December 13, 2023) is direct: any individual who has a 25% or greater ownership interest in a business is considered self-employed. That includes a sole proprietor who is, in practice, 100% of the business. Independent contractors who report income on a 1099-NEC and file a Schedule C are typically underwritten as self-employed, even if they do not think of themselves as "owning a company."
For FHA, HUD Handbook 4000.1 (revised August 13, 2025) defines self-employment income as income from a business in which the borrower has a 25% or greater ownership interest. The four basic business structures HUD lists are sole proprietorships, corporations, limited liability or S corporations, and partnerships.
On both rulebooks, the lender analyzes tax returns to arrive at a stable qualifying income. HUD tells mortgagees to calculate gross self-employment income as the lesser of the average over the previous two years (or a shorter allowed period) and the average over the previous one year. A decline of more than 20% over the analysis period generally means a manual underwrite. Depreciation and some other non-cash expenses can be added back, which is why a complete return, including all schedules, matters. The everyday takeaway is still this: write-offs that reduce your taxable income also tend to reduce the income a conventional or FHA lender can use.
That is the honest answer to "gross or net." Agency lenders start from the tax return, which is a net figure, then make allowed add-backs. They do not simply take the gross receipts on a 1099 or the top line of a Schedule C.
HUD allows self-employment income if you have been self-employed for at least two years. If you have been self-employed between one and two years, the income may be used only if you were previously employed in the same line of work, or a related occupation, for at least two years. Two years of complete individual tax returns, including all schedules, are required. Business returns for two years are also required unless income is increasing, funds to close are not coming from business accounts, and the loan is not a cash-out refinance. A year-to-date profit-and-loss statement and a balance sheet are required if more than a calendar quarter has passed since the last fiscal year-end.
Fannie Mae generally wants a two-year history of prior earnings. Income with less than two years of self-employment may be considered if the most recent signed personal and business federal returns reflect a full 12 months of self-employment income from the current business, and the file documents prior income in a related field. The point of the analysis is whether the income can be relied on for a personal mortgage payment, including whether a partnership or S corporation has actually distributed, or could distribute, that income without harming the business.
Under 38 CFR 36.4340, income from self-employment is generally considered stable when the applicant has been in business for at least two years. Less than two years usually cannot be considered stable unless there is previous related employment or extensive specialized training. Less than one year will rarely qualify. VA requires a profit-and-loss statement, a balance sheet, and two years of signed individual tax returns, plus business returns for a corporation or partnership.
USDA guaranteed loans have their own income and credit rules in 7 CFR 3555. If you are looking at a USDA-eligible Arizona property, we will follow the current USDA handbook and regulation for your file, subject to approval.
A write-off that helps at tax time can hurt on a conventional or FHA application. That is a reason to compare, not a reason to assume you will be declined.
Tax returns are a good tool for the IRS. They are a blunt tool for a mortgage when you run a real business with real write-offs. If your Schedule C net is much lower than the deposits that actually land in your account, an agency loan may understate what you can afford.
A Non-QM bank-statement loan looks at business or personal bank statements, typically 12 or 24 months, instead of tax returns. Guidelines, expense factors, and credit floors vary by investor. This is not a way around documenting income. It is a different way of documenting it. Our Self Employed and Non-QM page walks through that path, and Bank Statement Loan vs. Conventional compares the two.
For a rental property, a DSCR loan can qualify from the property's rental income rather than from your personal tax returns. That is a common fit for self-employed investors. See also DSCR vs. Conventional Investment Property Loan.
The $2,000 Best Price Guarantee does not apply to Non-QM or DSCR loans, and it does not apply to down payment assistance. It applies only to eligible fixed-rate conventional conforming, FHA, and VA loans. This page does not include the guarantee ticket. Read the full terms.
The underwriting rules are national. The person walking you through them can be local.
Arizona has a large community of self-employed people: construction and trades contractors, real estate professionals, health-care contractors, consultants, owner-operators, and people whose income arrives on a 1099-NEC. Jerry Kindig is based in Arizona and licensed here, and we work these files for purchases and refinances across the state, including Maricopa County.
If you also want Arizona down payment assistance, income is counted the way the first-mortgage agency counts it. Home Plus, for example, uses qualifying income of the borrowers on the note (household income only on USDA) and has a $155,386 cap as of April 6, 2026. A self-employed buyer whose tax-return income is under that cap may still qualify for Home Plus, subject to eligibility. A buyer whose tax-return income is low because of write-offs, but whose bank-statement income is high, may fit a Non-QM first mortgage better, and should not assume every assistance program will accept that documentation. We will tell you which combination is realistic. See Arizona down payment assistance and FHA requirements in Arizona.
Arizona's individual income tax is a flat 2.5% for tax year 2025, per the Arizona Department of Revenue. That is a state-tax fact, not a mortgage rule. Your federal return is still what FHA and Fannie Mae start from.
An illustrative look at a self-employed mortgage with us.
W-2 plus a side 1099, a Schedule C, an S corporation, or partnerships: the document list follows the structure.
Tax returns for FHA, VA, or conventional, or bank statements for Non-QM, or DSCR for a rental. Sometimes we compare more than one.
Our AI application tells you exactly what to upload: returns, a year-to-date profit-and-loss, statements, or a lease.
Agency and Non-QM investors treat self-employed income differently. We compare across 220+ wholesale lenders. All loans subject to approval.
Illustrative example. Timelines and requirements vary. All loans subject to approval.
You will not need every item on every path. We will tell you which stack matches the loan you are on.
Complete personal returns with all schedules. Business returns as required by FHA or Fannie Mae. IRS transcripts may be used.
Especially if we are more than a quarter past year-end. VA and FHA both speak to this.
A 25% or greater interest, a Schedule C, or entity documents, depending on the structure.
Typically 12 or 24 months of business or personal statements, per the investor.
Identification, a credit review, and reserves as required by the program. All loans subject to approval.
On FHA and Fannie Mae (conventional) loans, lenders analyze tax returns and use a calculated self-employment income after expenses, with certain allowed add-backs such as depreciation. They do not simply use gross receipts. If that net figure is too low, a Non-QM bank-statement loan may use deposits instead, subject to that investor's rules. All loans are subject to approval.
Usually, yes. If you receive a 1099-NEC and file a Schedule C, or you own 25% or more of the business, Fannie Mae and FHA treat you as self-employed. Two years of tax returns are typical. A 1099 alone, without returns, is generally not enough for an agency loan.
Two years is the standard on FHA, Fannie Mae, and VA. FHA may allow one to two years if you have at least two years of prior work in the same or a related field. Fannie Mae may allow less than two years with a full 12 months on the current returns and documented prior income. VA says less than one year will rarely work. Non-QM lenders may accept a shorter history. All loans are subject to approval.
That is a common reason to compare a bank-statement loan. Non-QM investors can use deposits rather than net taxable income. The guidelines and pricing are different, and the Best Price Guarantee does not apply to Non-QM. We will show you both paths when it makes sense.
Possibly, if the qualifying income used for the first mortgage is within the program cap and the rest of the program rules are met. Home Plus uses that qualifying income, with a $155,386 limit as of April 6, 2026. A Non-QM first mortgage may not pair with every assistance program. Ask us to check your combination. Subject to eligibility.
Yes, subject to approval. Conventional investment-property rules still use your personal income. A DSCR loan can qualify from the property's rent instead. See our DSCR page.
Jerry L Kindig III, NMLS #2397823, is an Arizona-based loan officer with Loan Factory, NMLS #320841. Call or text (480) 526-4505, email [email protected], apply with AI, or use the form on this page.
Written by Jerry L Kindig III, NMLS #2397823, a mortgage loan originator licensed in Arizona. Loan Factory, NMLS #320841. Equal Housing Opportunity. Program rules, income limits, assistance amounts, and loan limits change. Confirm current terms with the program administrator and a licensed loan officer before you make a decision. All loans and assistance are subject to approval and eligibility. Nothing on this page is a promise of approval, a loan offer, or a commitment to lend.
Send a note and a licensed loan officer will follow up. Bring whatever you already have: a recent return, a 1099, or a few statements. All loans are subject to approval.