Mortgages for 1099 and newly self-employed borrowers

If you are paid on a 1099 or only recently went out on your own, your income is real but your paper trail is short — and conventional underwriting leans heavily on a two-year history. There are documentation paths designed for exactly this situation: contractors, consultants, and commission-based professionals whose earnings traditional tax-return underwriting does not fully capture yet. Requirements vary by lender and program, but the door is open earlier than most people assume.

What does it mean to be a 1099 borrower?

A 1099 borrower earns income reported on a Form 1099 rather than a W-2 — independent contractors, gig and platform workers, freelancers, and commissioned salespeople. To a mortgage underwriter you are self-employed, which means your income is evaluated net of business expenses rather than as gross pay. That distinction is why a 1099 file is documented differently from a salaried one, even when your take-home feels just as steady.

Can I qualify with less than two years self-employed?

Sometimes, yes. While many programs want a two-year self-employment history, some will consider a shorter track record — often around one year — when you have a documented prior career in the same line of work. A software engineer who left a W-2 role to contract in the same field, or a salesperson who moved from salaried to commissioned work, can sometimes use that continuity to bridge the gap. The available options depend on the lender, the program, and the strength of the rest of your file.

When tax-return income is not representative

New business owners often have a first year of returns that looks weak — startup costs, equipment purchases, and front-loaded deductions can drag net income down even as the business gains momentum. When the returns are not representative of where the business is now, alternative documentation can matter. A bank statement path that reads recent deposits, or a CPA-prepared profit-and-loss statement, can reflect current cash flow that a backward-looking return does not.

A CPA letter or a signed P&L carries weight here because it comes from a third party attesting to your business activity and income. It is not a substitute for the underwriter's own analysis, but it is the kind of corroborating record that helps a shorter history hold up.

What documents do I need?

Plan to gather your 1099s, any tax returns you have filed since going self-employed, recent bank statements, and evidence the business is active — a license, a CPA letter, or client contracts. If you are using prior employment to support a shorter history, documentation of that earlier role in the same field helps. As always, you will also document assets for your down payment and reserves. The exact set depends on the path we choose, which is why a short upfront conversation saves a lot of back-and-forth.

Working with newly self-employed Eastside buyers

I am Stephanie Silverman, and the newly self-employed file is one I see constantly on the Eastside — the Redmond engineer who just started contracting, the Bellevue consultant a year into their own practice, the Kirkland founder whose first returns understate a fast-growing business. The instinct is to assume they have to wait two years to buy. Often they do not. The work is matching a real but short income story to a program that can read it fairly, and gathering the corroboration that lets underwriting say yes with confidence.

The most common mistake I see is good people self-selecting out — assuming they cannot qualify and not even asking. If your contracting or consulting income is steady and your prior career was in the same field, it is worth a conversation before you decide the timing is wrong.

Frequently asked questions

Can I use a CPA letter instead of two years of returns?

A CPA letter or CPA-prepared P&L can support a file with a shorter history, especially on alternative-documentation programs. It supplements underwriting rather than replacing it — the lender still confirms the business exists and assesses your ability to repay.

I switched from W-2 to 1099 in the same job. Does that help?

It can. Continuity in the same line of work is one of the factors that lets some programs consider a shorter self-employment history. Documenting that prior role makes the case stronger.

If your business is more established, compare the bank statement loan program and the broader self-employed home loans hub. For the fundamentals, the what is a bank statement loan guide is a good next read.