Paid on 1099? How Georgia Mortgage Lenders Count Your Income

More Georgians than ever earn a living without a regular paycheck. Real estate agents, rideshare and delivery drivers, contractors, consultants, stylists and salespeople on commission all buy homes every day.

🏠 If that's you, you can absolutely qualify for a mortgage. The process just looks a little different than it does for someone with a W-2. Here's how lenders count your income, and what you can do now to make buying easier.

1099 Income Is Treated Like Self-Employment

If you're paid as an independent contractor on a 1099, lenders generally treat you the same way they treat a business owner.

• Instead of pay stubs, lenders look at your personal tax returns, usually the last 2 years.
• They use your net income after business expenses, not the total amount you were paid.
• Your 2 years are usually averaged together to get a monthly figure.

That's true whether you drive for an app, sell real estate, or run your own one-person business.

The 2-Year Rule, and When It Can Be Shorter

Most lenders want to see 2 years of self-employment or 1099 income. That shows the income is stable and likely to continue.

There are exceptions:

• If you've been self-employed for at least 12 months and your tax return shows a full year of that income, a lender may be able to count it, as long as you worked in the same or a similar field before and earned about the same or more.
• If your business has been running for 5 years or more, some loan programs only need 1 year of tax returns instead of 2.

Why Your Tax Write-Offs Matter

This is the one that surprises people most. The deductions that lower your tax bill also lower the income a lender can use.

• If you were paid $90,000 and wrote off $40,000 in expenses, a lender generally starts with $50,000.
• Some write-offs that aren't out-of-pocket costs, like depreciation, can often be added back.
• If your income went down from one year to the next, the lender will want to understand why, and may use the lower year.

📣 If you plan to buy in the next year or two, talk with a lender before you file your taxes. A quick conversation can help you and your tax preparer plan with both goals in mind.

Paid on Commission With a W-2?

If you're a salaried or W-2 employee paid partly on commission, lenders typically average your commission income over the last 2 years using your pay stubs and W-2s. A shorter history can sometimes work if the rest of your file is strong.

When a Bank Statement Loan Fits Better

⭐ If your tax returns don't reflect what you really earn, a bank statement loan may be an option. Instead of tax returns, the lender reviews 12 or 24 months of bank deposits to figure your income.

• These loans can work well for self-employed buyers with large write-offs.
• They usually come with a higher rate and a larger down payment than a conventional loan.

⭐ If you're buying a rental property rather than a home to live in, a DSCR loan qualifies you based on the property's rental income instead of your personal income. Our guide to self-employed mortgages in Georgia covers both options.

What to Do Before You Apply

• Keep business and personal money in separate accounts.
• File your tax returns on time, and keep copies of your 1099s.
• Avoid switching from W-2 to 1099, or changing how your business is set up, right before you buy.
• Keep a year-to-date record of your income and expenses.
• Talk with a lender early, so there are no surprises.

We Work With Self-Employed Buyers Across Georgia

As a broker, we work with multiple lenders, including ones that specialize in self-employed and bank statement loans. We help buyers across Georgia, including Fulton, Cobb, DeKalb, Gwinnett, Clayton, Douglas, Cherokee, Fayette, Forsyth, Henry, and Rockdale counties, and Marietta, Smyrna, Kennesaw, Acworth, Woodstock, Roswell, and Sandy Springs.

The Bottom Line

Being paid on a 1099 doesn't keep you from buying a home. It just means your tax returns tell the story, so a little planning goes a long way.

Ready to stop Chatting with AI and start Talking to a mortgage professional who can close your loan?

👉🏼 Get your Real Numbers: CALL (678) 568-4568 / TEXT (678) 606-3359 or reach out via our ONLINE Contact Us form.

This article is for general information only and is not tax advice. Talk with your tax professional about your situation. Loan program availability and terms vary by lender. All loans are subject to credit approval, income verification and underwriting guidelines.