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- Matched with investor-friendly lenders
- Fast pre-approvals-no W2s required
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As a 1099 contractor, freelancer, or self-employed professional, you likely enjoy the flexibility of being your own boss—but when it comes to getting a mortgage, that independence can be a double-edged sword.
Traditional lenders often require W-2s, pay stubs, and tax returns that don’t reflect your true income. Fortunately, bank statement loans offer a smart alternative for 1099 workers, using your actual bank deposits to qualify instead of tax documents.
In this guide, we’ll break down how bank statement mortgage loans work for 1099 contractors and how to qualify in 2025—even if you have irregular income or lots of tax write-offs.
🏦 What Is a Bank Statement Loan?
A bank statement loan is a type of non-QM (non-qualified mortgage) that allows self-employed individuals—including 1099 contractors—to use bank deposit history as proof of income instead of tax returns or employer verification.
This is a popular option for:
- Freelancers
- Gig workers
- Real estate agents
- Rideshare drivers
- Independent consultants
- Small business owners
🔗 Learn more in our full Bank Statement Loan Guide
✅ Why 1099 Contractors Get Denied by Traditional Lenders
If you’re a 1099 earner, you probably deduct business expenses on your taxes. That means your adjusted gross income (AGI) can look much lower than what you actually earn—especially to a conventional underwriter.
Conventional mortgage pitfalls for 1099 borrowers:
- Two full years of tax returns required
- Write-offs reduce qualifying income
- Higher scrutiny on irregular income streams
- Hard DTI (Debt-to-Income) caps
Bank statement loans sidestep these issues by calculating your income based on actual deposits, not what’s reported to the IRS.
🧾 How Bank Statement Loans Work for 1099 Contractors
Here’s how most lenders qualify 1099 borrowers using bank statements:
| Step | What’s Required |
|---|---|
| Bank Statement Review | 12 or 24 months of personal or business statements |
| Income Calculation | Average deposits × expense factor (usually 50–90%) |
| Credit Score | Minimum 620–660 depending on program |
| Loan-to-Value (LTV) | Up to 85% (15% down), 75–80% for investment |
| Reserves | Typically 3–6 months of mortgage payments |
| Documentation | ID, bank statements, possible CPA letter |
🔗 Use our Loan Comparison Calculator to see which options fit your income pattern.
💵 Example: Qualifying as a 1099 Contractor
Let’s say you’re a self-employed graphic designer earning income from freelance platforms.
- Monthly Deposits (12-month avg): $12,000
- Expense Ratio Used: 50% (standard for sole proprietors)
- Qualifying Income = $6,000/month
- DTI Cap: 45–50%
If your new mortgage payment is $2,000/month, you’ll likely qualify with room to spare—no tax returns needed.
📋 Requirements for 1099 Borrowers (2025)
| Requirement | Typical Range |
|---|---|
| Bank Statement Length | 12 or 24 months (some allow as few as 3–6) |
| Personal vs. Business | Both accepted; business often preferred |
| Minimum Credit Score | 620–660 |
| Down Payment | 15–25% depending on property and borrower |
| Debt-to-Income Ratio | Up to 50% |
| Proof of Self-Employment | Business license or CPA letter (sometimes optional) |
🟢 For investors: Bank statement loans for investment properties
🧠 Bank Statement vs Conventional Mortgages
| Feature | Bank Statement Loan | Conventional Loan |
|---|---|---|
| Income Verification | Deposits (no tax returns needed) | W-2s, tax returns, pay stubs |
| Documentation Required | ID, bank statements | Full tax documentation (2 years) |
| Approval Time | Faster (2–4 weeks) | Slower (4–6+ weeks) |
| Best For | Self-employed & gig workers | W-2 employees with clean tax history |
| Rate Comparison | Slightly higher rates (~0.5–1.5% premium) | Lower rates for fully documented borrowers |
🛠️ Tips to Qualify as a 1099 Contractor
- Keep Deposits Consistent: Lenders like to see regular deposits, even if variable in size.
- Avoid Large Transfers: Minimize unexplained large transfers between accounts.
- Separate Business & Personal Accounts: Makes underwriting cleaner and faster.
- Prepare Reserves: Having 3–6 months of payments in the bank shows strength.
- Work with Non-QM Specialists: Many traditional banks don’t offer bank statement programs.
Get Expert Financing
- Matched with investor-friendly lenders
- Fast pre-approvals-no W2s required
- Financing options fro rentals, BRRRR, STRs
- Scale your portfolio with confidence
🏘️ Can You Use Bank Statement Loans for Investment Properties?
Yes—many bank statement loan programs allow:
- Single-family rentals
- Condos
- Duplexes and small multifamily (up to 4 units)
- Short-term rentals (Airbnb/Vrbo)
This makes them ideal for self-employed investors who need flexible documentation and want to grow their rental portfolios.
🔗 Explore DSCR Loans if you prefer a loan based solely on rental income.
📣 Final Thoughts
As a 1099 contractor, getting a mortgage doesn’t have to mean jumping through hoops. Bank statement loans offer a flexible, realistic solution based on your actual cash flow—not what your tax return says on paper.
Whether you’re buying a home, refinancing, or investing in rental property, you deserve financing that reflects the way you earn.
Get Expert Financing
- Matched with investor-friendly lenders
- Fast pre-approvals-no W2s required
- Financing options fro rentals, BRRRR, STRs
- Scale your portfolio with confidence
Our advice is based on experience in the mortgage industry and we are dedicated to helping you achieve your goal of owning a home. We may receive compensation from partner banks when you view mortgage rates listed on our website.
