Investing as 1099 employee

[Dina Joseph]

Question: How can I invest as a NEW 1099 employee (Ex. independent insurance agent commission only)? My last two years of taxes are from a different W2 job. How can I prove to the bank I can afford a property? I would like to house-hack FHA on a duplex, but if that's not applicable based on my new employment, I would purchase a single with 20% down. Is that my best option to get started? What are some strategies 1099 employees use to avoid waiting on the sidelines while they don't have 2 years of taxes to show? - Dina Joseph

[Dina Joseph]

Quote from @Josh Green:

@Dina Joseph

You won't get an owner occupant, conventional loan with the 1099 and current amount of work history. At the fastest, you can obtain one on 1 year of tax returns but the lender will take say 50% of that income toward your DTI ratio so your buying power will be hit hard.

Only other option to buy will be to use a non-owner occupant loan (which technically you can't intend to occupy) such as a DSCR OR maybe a non-conventional portfolio loan like a bank loan or asset-based loan.

All those types of loans will typically require higher down payments and interest rates than a Fannie Mae/Freddie Mac backed loan.

Thank you for responding Josh! I agree, I think at minimum it does help to be patient and wait at least a year to save more money to secure my financial position. I'm considering a DSCR as well, perhaps a portfolio lender might help. Thanks again for your response!