Ultimate Guide: How Self-Employed, Gig, and 1099 Workers Can Qualify for a Home Loan

Being self-employed or working as a gig/1099 contractor gives you freedom, but it also comes with unique challenges when it’s time to buy a home. If you’ve ever applied for a mortgage through a traditional bank, you’ve probably heard “no” more times than you’d like. The truth? That “no” often has less to do with your ability to pay and more to do with outdated underwriting rules.

At AZ Loan Help, I specialize in turning those “No’s” into a solid YES.

The Traditional Route (and Why It’s Harder for the Self-Employed)

Most banks underwrite home loans using very narrow guidelines: Traditional Income Evaluation is through Tax Returns for proof of income.

• Tax Returns: Typically include the average of 2 years of Federal Returns showing consistent net income (after deductions)

• Tax Returns: If too many deductions show little or no income, you may not qualify.

• Tax Returns: If Net income declines more than 20% from 1 year to the next, you may not qualify, even if your Gross Income is more.

The moral of this story is Tax Returns, and if you don’t show your net income correctly, you can be denied a home loan, no matter what your Gross Income is for the company.  This can seem completely unfair, and I agree it Totaly is.

For entrepreneurs, gig workers, and independent contractors, this often creates problems: ✔ Business expenses reduce taxable income (great for taxes, but hurts loan approval). ✔ Multiple income streams aren’t always recognized (you need 2+ years of consistency). ✔ Irregular income doesn’t fit the “steady paycheck” mold (banks tend to reject it).

When you do have qualified income through this method of tax returns, it does open the door for very strong loan terms and options in all classes of loan products. With Loan Options as little as 0% down (VA & USDA loans); 3 – 5% down (Conventional loans); or 3.5% Down (FHA loans). Also, with this type of income, you can potentially be approved for DPA programs (Down Payment Assistance).

That’s where Non-QM (Non-Qualified Mortgage for government standards) Loans come into play.

Non-QM Loan Options for the Self-Employed, Gig, and 1099 Worker

Unlike the traditional “one size fits all” approach of using Tax Returns to prove Income (ability to repay the mortgage), Non-QM programs look at the real picture of your income and assets. Here are some of the most powerful options available:

🔹 Bank Statement Loans

• Use 12 or 24 months of personal or business bank statements instead of tax returns.

• Lenders average deposits to calculate qualifying income. There is an expense ratio applied to this type of income, and it is important that you understand how that gets applied and accounted for, considering your type of business.

• Perfect for freelancers and business owners who show strong cash flow.

• NO Tax Returns required

  
  

🔹 Profit & Loss (P&L) Loans

• A CPA or Enrolled Agent-prepared P&L statement can be used in place of tax returns.

• Streamlined for businesses with fluctuating expenses.

• NO Tax Returns required

  
  

🔹 1099 Income Loans

• Approval based on 1099 statements instead of tax returns.

• Great for contractors, sales professionals, and gig workers who receive 1099s.

• NO Tax Returns required

  
  

🔹 Asset Depletion Loans

• Your liquid assets (savings, retirement, investments) can be converted into qualifying income.

• Perfect for high-net-worth individuals who prefer flexibility.

• NO Tax Returns required

  
  

🔹 No-Ratio Loans

• No income documentation required. Approval is based primarily on credit, equity, and assets.

• Ideal for borrowers with strong financial reserves but complex income structures.

• NO Tax Returns required

Why Working With a Broker Matters

Here’s the reality: not every lender offers these programs, and even when they do, each bank has its own underwriting quirks.

As a broker, I have direct access to: 144+ residential lenders

That means I don’t just shop your file with one bank; I place you with the lender whose guidelines match your unique financial situation.

The Bottom Line: Don’t Accept “No”

If you’re self-employed, a 1099 worker, or part of the gig economy, buying a home is not out of reach. You simply need a loan officer who understands how to structure the story of your income and match it with the right lender.

With the right strategy, your dream of homeownership can absolutely become a reality.

📞 Call or Text: 480-228-1089 🖥️ Book an appointment: BookWithAaron.com 🌐 Learn more: AZLoanHelp.com

At AZ Loan Help, we don’t sell loans; We create strategies that open doors.