How to Qualify for a Mortgage With Only One Year of 1099 Income

If you moved from W2 employment to 1099 income about a year ago, you’ve probably heard the same thing from at least one lender: you need two full years of self-employed income before you can qualify for a mortgage.

That guideline exists. Many banks follow it rigidly. But it is not the only path to homeownership.

At LendFriend Mortgage, we work with software engineers, attorneys, consultants, medical professionals, and sales executives who made the switch from W2 to 1099 and assumed they were sidelined for another year. In many cases, they weren’t. With the right structure — and the right lender — 1 year of 1099 income can be enough.

This article breaks down how it works, who qualifies, and why working with a mortgage broker can make the difference between “wait another year” and “let’s get you pre-approved.”

Why Most Lenders Require 2 Years of 1099 Income

When you switch from W2 to 1099, mortgage underwriting typically classifies you as self-employed. Even if you are doing the same job, for the same company, at a higher income level, your tax classification changes how lenders evaluate risk.

Traditional mortgage guidelines for self-employed borrowers generally require:

• 2 years of personal and sometimes business tax returns, with income averaged over that period. This allows lenders to measure stability and identify income trends.
• Evidence that income is stable or increasing. Declining income can reduce qualifying amounts.
• Documentation that the business is likely to continue. Lenders want to see that the income source is ongoing, not temporary.

From a risk-management standpoint, this makes sense. 1099 income can fluctuate. Business deductions can reduce taxable income. Some independent contractors have volatile revenue year to year.

The problem is that not every 1099 borrower is starting from scratch.

A senior software engineer who worked W2 at Apple for four years and then converted to a 1099 contractor role in the same field did not suddenly become inexperienced. A litigation attorney who moved from salaried associate to 1099 counsel at the same firm did not lose earning power overnight. Yet many retail banks apply a blanket 2-year rule without considering the broader context.

That’s where structure matters.

The Better Solution: A 1-Year 1099 Mortgage Program

There are wholesale lenders that allow qualification with 1 year of 1099 income, provided the borrower shows continuity in the same line of work.

At LendFriend Mortgage, we structure these loans around two core principles:

• You must have at least one full year of documented 1099 income. This typically means a completed tax year reflecting your independent contractor earnings.
• You must demonstrate at least a 2-year history in the same profession. Your prior W2 employment counts if it shows you were working in the same field before the transition.

The emphasis is on career stability, not tax classification. Underwriters evaluate whether your move from W2 to 1099 represents a logical progression — often higher compensation, more flexibility, or a strategic change — rather than a risky pivot into a new industry.

For example:

• A software engineer moves from salaried employment to 1099 consulting for large tech firms. Compensation remains consistent or increases. The technical skillset and industry remain the same.
• An attorney shifts from W2 associate to 1099 contractor status within the same practice area. Billing structure changes, but legal work remains identical.
• A medical specialist leaves hospital employment to bill independently while maintaining similar patient volume and income.

In these cases, 1 year of 1099 income combined with prior W2 history can be sufficient for mortgage approval.

How 1099 Income Is Calculated

Income calculation is where many 1099 borrowers run into trouble — especially with traditional self-employed underwriting.

Standard self-employed analysis relies heavily on net income after expenses. If you deduct aggressively for legitimate business reasons, your taxable income may look far lower than your actual cash flow.

Certain 1-year 1099 programs take a different approach.

Instead of relying strictly on bottom-line net income, lenders may use a percentage of your gross 1099 income as qualifying income — often up to 90% — depending on the specific program and profile.

That distinction can meaningfully increase borrowing power.

For example, if you earned $200,000 in 1099 income last year, and the lender applies a 90% factor, $180,000 may be used as qualifying income before debt-to-income ratio calculations. That can produce a very different result compared to averaging 2 years of net income after deductions.

The exact calculation depends on the lender, documentation, and overall risk profile, but the key takeaway is this: being 1099 does not automatically mean your income will be discounted beyond usability.

Credit Score and Down Payment Requirements

This is not a no-documentation shortcut. Strong fundamentals still matter.

Typical qualification parameters look like this:

• Minimum credit score around 660. This is generally the floor for consideration.
• Preferred credit score of 700 or higher. Stronger credit improves pricing and approval flexibility.
• Down payment often between 10% and 15%, depending on the borrower’s profile, loan size, and property type.

Borrowers with higher credit scores, solid cash reserves, and stable income trends tend to receive more favorable rate options. Those with lower scores may still qualify but may see different pricing or down payment expectations.

The structure is flexible — but it is still underwriting.

Why Mortgage Brokers Are Often the Best Solution for 1099 Borrowers

If you walk into a large retail bank and their internal overlay says “2 years self-employed required,” that conversation usually ends quickly.

Mortgage brokers operate differently.

LendFriend Mortgage works with a network of wholesale lenders. Each lender has its own credit box, guidelines, and tolerance for career transitions. Some adhere strictly to 2 years. Others evaluate the totality of the borrower’s profile and allow 1 year of 1099 income when prior W2 history supports continuity.

That access creates optionality.

Instead of accepting a single answer from one institution, borrowers benefit from comparing multiple underwriting interpretations. The goal is not to bend rules. The goal is to match the borrower to the lender whose guidelines align with their situation.

For professionals who recently moved from W2 to 1099, this flexibility can be the difference between waiting another year and buying now.

Real-World Examples

Consider a senior software engineer who worked W2 for four years earning $185,000 annually. She transitions to a 1099 consulting agreement with a major tech company and earns $230,000 in her first year. She has a 735 credit score, 15% available for a down payment, and healthy reserves.

Under a rigid 2-year requirement, she waits another year. Under a 1-year 1099 program with documented continuity, she can qualify based on her most recent income and purchase her home without delay.

Now consider an attorney who moves from salaried associate to 1099 contract counsel at the same firm. Total compensation remains consistent. He has strong credit and a 10% down payment. With 1 year of 1099 income and clear professional continuity, he may qualify under the right program rather than postponing homeownership.

These scenarios are increasingly common as compensation structures evolve.

Common Mistakes 1099 Borrowers Make

Waiting automatically because someone said “2 years required.” Not every lender interprets guidelines the same way. A single conversation should not determine your timeline.

Maximizing tax deductions without planning for mortgage qualification. There is nothing wrong with legitimate write-offs. But if you intend to buy a home, coordination with your CPA can help balance tax efficiency with qualifying income needs.

Talking only to retail banks. Retail institutions often have overlays that are more restrictive than underlying guidelines. Exploring broker channels can uncover alternatives.

Assuming 1099 income is viewed negatively. For many high-earning professionals, 1099 status reflects career growth, not instability.

The Bigger Workforce Shift

The modern workforce is changing. High-level professionals increasingly choose contract structures for flexibility, tax strategy, or increased compensation. Remote work and consulting arrangements have accelerated this trend.

Mortgage lending has evolved as well — just not uniformly across all institutions.

Lenders that understand professional continuity recognize that a borrower who moves from W2 to 1099 within the same field is not equivalent to someone launching a brand-new speculative business.

For qualified borrowers, homeownership does not have to pause simply because the pay structure changed.

Is One Year of 1099 Income Enough for You?

If you meet the following characteristics, a 1-year 1099 mortgage may be realistic:

• You have at least one full year of documented 1099 income.
• You worked in the same industry for at least 2 years prior, even if as a W2 employee.
• Your income is stable or increasing.
• Your credit score is at least 660, with stronger positioning at 700+.
• You have a down payment of approximately 10% to 15%, depending on structure.

The only way to know for certain is to review the full profile.

At LendFriend Mortgage, we analyze income documentation, prior employment history, credit profile, and asset position before matching you to the appropriate lender. The objective is clarity — not false promises and not unnecessary delay.

The Bottom Line

The move from W2 to 1099 is often a step forward. It usually means more autonomy, higher upside, and greater control over your income. Your mortgage strategy should reflect that progress — not penalize it.

If you have 1 full year of documented 1099 income and at least 2 years of experience in the same line of work, you may not need to wait. With the right structure, the right documentation, and access to the right wholesale lenders, qualifying now can be realistic.

Assuming you must wait 2 years without exploring alternatives can cost you leverage and opportunity — especially in markets where prepared buyers have negotiating power.

Homeownership is still possible for high-earning 1099 professionals who recently made the switch. It simply requires proper structuring, intelligent lender selection, and clear guidance.

That is exactly what LendFriend Mortgage is built to do.

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