1099 mortgages in Michigan, both routes explained.
Often, yes. If you’re paid on 1099s in Michigan, you may be able to qualify the regular way on your tax returns with certain write-offs added back, or through a 1099-only program that uses your 1099s and proof of this year’s earnings instead of your returns. The right route depends on how far your deductions pull your taxable income below what you actually earn, and that’s a comparison you and I can run in one call.
I’m Rob McKenney, a Marine Corps veteran and an independent mortgage broker in Milford. I work with contractors, commission earners and freelancers all over Michigan, and I check the same 1099 file against more than one lender’s guidelines, because lenders don’t all count 1099 income the same way.
Call Rob: (810) 819-8686 Check My 1099 IncomeMost lenders treat 1099 income as self-employment income, even if you think of yourself as working for one company. That covers a lot of Michigan paychecks.
Electricians, plumbers, HVAC techs, drywall and roofing subs, and engineers or IT contractors billing a supplier on a 1099 instead of drawing a W-2.
Real estate agents, insurance agents and independent sales reps whose commissions are reported on a 1099. Lumpy months are normal; lenders look at the full year.
Rideshare, delivery and other app-based work. Lenders differ on platform income, especially income reported on a 1099-K, so this is one to check lender by lender.
Designers, writers, bookkeepers, coaches and consultants with several clients, each sending a 1099 at year end.
A W-2 job plus 1099 work on the side. The W-2 qualifies the usual way; the 1099 piece usually needs its own history before a lender will count it.
If you did the same work as a W-2 employee before switching, some lenders and programs give that history credit. Changing fields at the same time is harder.
Conventional, FHA, VA and USDA loans qualify a 1099 earner on personal tax returns, usually the last two years. The lender starts from the net profit on your Schedule C, not the gross on your 1099s, so every deduction you took shrinks the number. Then certain write-offs that didn’t cost you cash are added back: depreciation, depletion, amortization, business use of your home and non-recurring casualty losses, plus the depreciation portion of a standard mileage deduction on Fannie Mae’s worksheet. For someone who drives for work, that last one can matter.
This route often costs less than a non-QM loan, so it’s the one I check first. For a lot of 1099 earners the add-backs close the gap and a regular loan works.
When the add-backs still leave you short, a 1099-only program skips your Schedule C entirely and works from the 1099s themselves. It exists for the borrower whose returns are accurate for tax purposes but understate what they can comfortably afford. Here’s how the number gets built:
One or two years of 1099s from every payer, depending on the program. Many lenders confirm them against an IRS transcript, so the forms need to match what was reported.
Year-to-date proof that the work is still coming in, such as recent bank statements showing the deposits or a statement from the company paying you. Income that stopped or dropped sharply raises questions.
Instead of your actual deductions, most programs subtract a flat expense factor the lender sets. That’s why heavy write-offs don’t hurt you here the way they do on the tax-return route.
What’s left is averaged over the 12 or 24 months covered, and that monthly figure is the income you qualify on. If this year is running lower than the 1099s, many lenders use the lower number.
Say you’re an independent HVAC tech paid on 1099s, with the same year twice in a row to keep it simple. These numbers are made up to show the mechanics, not to predict your result.
| Step | Tax returns with add-backs | 1099-only program |
|---|---|---|
| Gross on your 1099s, per year | $120,000 | $120,000 |
| Expenses subtracted | −$62,000 (your actual deductions) | −$12,000 (10% expense factor, an example) |
| Added back | +$8,000 (mileage depreciation, home office) | None needed |
| Annual qualifying income | $66,000 | $108,000 |
| Monthly qualifying income | $5,500 a month | $9,000 a month |
Same tech, same 1099s, and a gap of $3,500 a month in qualifying income, all from how the expenses are counted. If the $5,500 already covers the home you want, the tax-return route wins because it usually costs less. If it doesn’t, the 1099-only number is the one to price. Every lender sets its own expense factor, so the second column moves from lender to lender, too.
The three routes a 1099 earner usually chooses between, in general terms. Every lender sets its own rules, so treat this as the shape of each option, not program terms.
| Tax returns + add-backs | 1099-only | Bank statement | |
|---|---|---|---|
| Income starts from | Schedule C net profit | Gross on your 1099s | Deposits in 12 or 24 months of statements |
| Business expenses | Your actual deductions, some added back | A flat factor the lender sets | A lender factor, or a ratio your CPA documents |
| Tax returns used to qualify | Yes | Usually not | Usually not |
| Loan types | Conventional, FHA, VA, USDA | Non-QM | Non-QM |
| Pricing | Usually the lowest | Usually higher | Usually higher |
| Best fit when | Your returns show enough after add-backs | Most income comes on 1099s and write-offs are heavy | Income arrives in ways a 1099 doesn’t capture |
If you want to see how the bank statement math works step by step, it’s on my bank statement loan page. Every other self-employed option, including CPA-prepared P&L and asset-based loans, is on the self-employed mortgage page.
A missing payer or a corrected 1099 that never got to the lender shows up fast. Pull every form before we start.
If this year is running well below last year, many lenders qualify you on the lower figure. Michigan seasonal work makes the timing of your application matter.
Going from W-2 to 1099 in the same field is usually workable. Switching fields and pay structure at once is where files stall.
Several 1099s plus cash or card sales can make a bank statement loan capture more than a 1099-only program would.
A truck or equipment loan on your personal credit counts against you unless the business has paid it from business funds, usually for the last 12 months, with no late payments.
An unpaid balance with the IRS or the State of Michigan has to be addressed, usually with a payment plan in good standing, before most lenders will close.
Your 1099s for the last two years, from every payer.
Proof of this year’s income: recent bank statements showing the deposits, a payer statement or a platform earnings summary.
Your last two years of personal tax returns, all schedules, so I can run the add-back math first.
How long you’ve done this work, including any W-2 years in the same field.
Statements for the money you’ll bring to closing, bank or investment accounts.
Your CPA’s contact information, in case a lender wants something confirmed.
One line I don’t cross: I’m not your tax advisor. What to deduct, how to file and whether to change how you’re paid are questions for your CPA. My job is the mortgage math, and it’s you and me working out which route gives you the strongest file.
Buying a rental instead of a home to live in? A DSCR loan qualifies on the property’s rent rather than your 1099s.
I’ll run your tax returns with the add-backs first, then your 1099s through more than one lender’s guidelines, and show you where each one lands. We’ll figure it out.
Call Rob: (810) 819-8686 Check My 1099 IncomeMore on self-employed mortgages, how bank statement loans are calculated, and other Michigan mortgage answers.
Sources: Fannie Mae Selling Guide B3-3.5 and B3-3.6 (self-employment income, renumbered by Announcement SEL-2026-02) and Form 1084; Fannie Mae B3-6-05 (business debt in the borrower’s name); Freddie Mac Seller/Servicer Guide Section 5304.1; HUD Handbook 4000.1; VA Lender’s Handbook (M26-7), Chapter 4; IRS Form 4506-C; 12 CFR 1026.43 (ability-to-repay). 1099-only program descriptions reflect typical wholesale lender guidelines, which vary by lender and change over time.
