You are viewing the printer-friendly version of Is there a problem qualifying since I now receive a 1099 instead of a W-2?Is there a problem qualifying since I now receive a 1099 instead of a W-2?Stephen,I just put a house under contract and I have some questions about qualifying for a mortgage. For the past 10 years I worked for a large software company as a programmer. Three months ago I left the company to become a consultant. I am actually doing work for my old company and making even more money. Is there a problem qualifying since I now receive a 1099 instead of a W-2? Can I cut through the red tape by applying for a No-income Verification (NIV) loan? - Robert in Atlanta Robert, In the mortgage industry, people who receive a 1099 are considered "self-employed", same as if you opened a new retail store or restaurant. In most cases, underwriters want to see a two-year history of the business and will average both revenue and expenses to determine qualifying income. Having a guaranteed salary and receiving a W-2, is perceived by underwriters as a more stable source of income and is not subjected to nearly as much scrutiny. A No-Income Verification (NIV) loan will not help your situation. The purpose of these loans is to allow borrowers with complex financial situations to simply state their income on the loan application without requiring them to provide the supporting documentation. Unfortunately, NIV loans still have the same two-year requirement for self-employed borrowers. Your only choice at this point is to go with a "No Documentation" loan. These mortgages only consider credit history and down payment amount. As you might have guessed they are at rates slightly higher than full documentation loans and usually require more money down. Lastly, my best advice is to always check with a mortgage advisor first, before you put a contract on a house. This way you can clear any financing hurdles upfront and concentrate your efforts on finding the right house with a payment you can afford. Stephen If you have a question that you would like me to answer please email me at Stephen@katzmortgageteam.com. |