How to show proof of income with 1099 form

Question

I will be a 1st time home buyer , when getting a loan from a bank how do i show them proof of income from my 1099 form/s. I work at my brothers business as a independent contractor , he has an accountant for this business is necessary for him to to this job or i can do it myself.

Preston Dean · Answer

HI @Jimmy Rojas

You have to show 2 years of taxable income to the IRS. Not sure how long you have worked at your brothers business but the general timeframe is 2 years

Mason Weiss · Answer

Hey Jimmy, I can help you go over your mortgage options as a first time self employed home buyer. I am a 1099 buyer and a mortgage lender as well. Let me know if you are interested!

Jason Wray · Answer

Jimmy,

You need to show (2) years of 1099 SE income in order to use FHA, or traditional financing to get approved for a mortgage. When you file your taxes at the end of the year the accountant is going to ask you for your receipts or what and how much you want to write off using deductions. Keep in mind the more you write off the less money you will show as you net.

If you have (2) full years and depending on how the accountant files your taxes you will have a schedule C more than likely or another schedule that shows profit and loss. Banks use the Net not the gross so it’s not what you make its what you show to the IRS.

If you do not have (2) full years of 1099 you can still get approved for a mortgage using a Non/QM program like a "1 Year 1099" program or Bank statements. It does come down to DTI and what you can show versus what you can qualify for in terms of home price. Make sure you talk to a Banker or Loan officer that is well versed in both SE (Self Employed) income and also Non/QM programs.

One tip I will give you as a Banker is open up a "Business Checking account" and for the next 12 months pay "Everything" out of that account. Pay your vehicle loan, credit cards, etc because in 12 months all of the accounts you pay out of a business checking account will be omitted from your DTI in the future. Its a nice little cheat/loophole on the mortgage side that can help afford a larger home pice and increase your chances of getting a home or other loans.

If you have any questions feel free to reach out I am always happy to help and go over the basics.

How to show proof of income with 1099 form

4 Replies