Contractors, freelancers, and commission earners document their income with 1099s — not W-2s. BFF's 1099 loan program uses that income directly, with only a 10% expense factor. No tax returns. No bank statements. Just the 1099.
Program at a Glance
A 1099 loan uses 1099 income forms — 1099-NEC, 1099-MISC, or 1099-K — as the primary income documentation instead of W-2s or tax returns. BFF applies a flat 10% expense factor to the gross 1099 income to arrive at qualifying income. That's the entire calculation. For contractors and gig workers who don't have significant business expenses, this often produces a much higher qualifying income than bank statements or tax returns would.
The difference between a 1099 loan and a bank statement loan comes down to one number: the expense factor. For contractors with lean overhead, the 1099 program will qualify them on significantly more income. Here's the math on a $120,000 gross income example.
Alt-Doc Program Bank Statement Loan Gross Deposits (12 mo.)$120,000 Expense Factor50% Expenses Deducted−$60,000 Qualifying Annual Income$60,000 Qualifying Income: $5,000/month Better BFF 1099 Program 1099 Loan Gross 1099 Income (12 mo.)$120,000 Expense Factor10% Expenses Deducted−$12,000 Qualifying Annual Income$108,000 Qualifying Income: $9,000/month When bank statements win: If the borrower has genuine business bank account activity that exceeds their 1099 income, or if actual expenses are below 10% and a P&L letter can document that, run both programs in the Quick Pricer and use whichever produces better qualifying income.
1 Collect the 1099s Gather either 1 year or 2 years of 1099-NEC, 1099-MISC, or 1099-K forms. The borrower and broker select the period that produces the strongest income. 2 years smooths inconsistent earnings; 1 year works well if recent income is materially higher than prior-year amounts. 2 Apply the 10% Expense Factor Total all 1099 income for the selected period. Apply the 10% expense deduction to arrive at qualifying income. Divide by the number of months (12 or 24) for a monthly income figure. Alternatively, if actual documented expenses are lower than 10%, a third-party P&L statement can be used to reflect the true expense ratio. 3 Document YTD Income Alongside the 1099s, YTD income must be verified to confirm the income is ongoing in the current period. Acceptable YTD documentation includes current pay stubs from the issuing payer, bank statements showing active 1099 deposits, or an engagement letter or active contract. 4 Price and Submit Run the qualifying income through the DTI calculation. No 4506-C required. No tax transcripts. No employer verification. Price the scenario in the BFF Quick Pricer and submit through the broker portal. We Deliver.
The 1099s document what the borrower earned. The YTD documentation confirms they're still earning it. Any of these are acceptable to support the ongoing income picture.
📈 Pay Stubs from Payer Most recent pay stub or contractor payment stub from the primary 1099 issuer showing YTD earnings for the current year. 🏠 Bank Statements 2-3 months of most recent personal or business bank statements showing active deposit activity from 1099 payers. 📄 Engagement Letter / Contract A current signed contract or engagement letter from the payer confirming ongoing work arrangement and compensation structure.
Key parameters from the BFF 1099 Matrix. Download the PDF for complete guidelines before pricing any 1099 scenario.
| Parameter | Requirement |
|---|---|
| Max Loan - Purchase | $4,000,000 |
| Max Loan - Cash-Out | $3,000,000 |
| Max LTV - Purchase | 90% (FICO and loan amount tiered - see full matrix grid) |
| Max LTV - R&T Refi | 85% |
| Max LTV - Cash-Out | 80% |
| Min FICO | 660 |
| 1099 Form Types | 1099-NEC · 1099-MISC · 1099-K |
| Statement Period | 1 year OR 2 years (borrower/broker selects best option) |
| Expense Factor | 10% fixed expense deduction applied to gross 1099 income |
| P&L Alternative | Third-party P&L statement accepted if actual expenses <10% (must be prepared by CPA, EA, CTEC, or PTIN preparer) |
| YTD Documentation | Required - pay stubs, bank statements, or engagement letter/contract |
| Occupancy | Primary Residence · Second Home · Investment Property |
| Property Types | SFR · PUD · Warrantable & Non-Warrantable Condos · Condotels · 2-4 Unit · Manufactured |
| Interest Only | Available at 640+ FICO · Max 85% LTV (purchase) · Max 80% R&T · Max 75% cash-out |
| 40-Year Fixed | Available with or without interest-only feature |
| Tax Returns | Not required when qualifying on 1099 income |
| 4506-C / Transcripts | Not required |
| Note | LTV limits are tiered by loan amount and FICO score. Always confirm the specific LTV/FICO tier in the current matrix before pricing. 90% LTV requires higher FICO and lower loan amounts. |
Construction, electrical, plumbing, HVAC, IT consulting — any trade or professional who works project-to-project and invoices clients directly.
Uber, Lyft, DoorDash, Instacart, Amazon Flex, TaskRabbit, Fiverr — consistent 1099-K income from platform payments qualifies directly.
Insurance agents, mortgage brokers, financial advisors, and real estate agents who receive 1099-NEC commissions rather than a W-2 salary.
Photographers, designers, writers, video producers, developers — creative professionals billing multiple clients who issue 1099s each year.
Traveling nurses, locum tenens physicians, physical therapists, and allied health professionals placed through staffing agencies on 1099 arrangements.
Business consultants, executive coaches, trainers, and subject-matter experts who bill clients directly and receive 1099-NEC for each engagement.
BFF applies a flat 10% expense factor to gross 1099 income. Total the 1099s for the selected period (1 or 2 years), deduct 10% for expenses, and divide by the number of months. Example: $120,000 gross 1099 income × 90% = $108,000 qualifying income ÷ 12 = $9,000/month. A third-party P&L statement can replace the 10% factor if actual documented expenses are lower.
Yes. BFF accepts 1 year or 2 years of 1099 income — whichever produces the stronger qualifying income. 1-year 1099s are especially useful when recent income is materially higher than the prior year, or when the borrower has only been working in their current field for 12–18 months. YTD documentation is required alongside either period to confirm income is ongoing.
BFF requires YTD documentation to confirm the 1099 income is still active in the current year. Acceptable options include: current pay stubs from the 1099 payer, 2–3 months of recent bank statements showing active deposits from the payer, or a current signed contract or engagement letter. The YTD documentation just needs to show the income relationship is ongoing — it doesn't need to match the 1099 total exactly.
The critical difference is the expense factor. A bank statement loan applies a 50% expense factor (or actual expenses via CPA letter) to deposit income. A 1099 loan applies only a 10% expense factor to gross 1099 earnings. For a borrower with $10,000/month in 1099 income and low actual expenses, the 1099 program qualifies them on $9,000/month vs. $5,000/month under bank statements. If actual expenses are genuinely high, bank statements or a P&L may be more appropriate.
Any borrower who receives 1099-NEC, 1099-MISC, or 1099-K income qualifies, including independent contractors, freelancers, gig platform workers (Uber, DoorDash, Amazon Flex), commission-only sales professionals (insurance agents, real estate agents, financial advisors), healthcare contractors, and consultants. The key requirement is that income flows directly to the borrower via 1099, not through a corporation or entity they own.
BFF 1099 Matrix — Rev. Feb 2026
Before committing to 1099 or bank statements, run both in the Quick Pricer. If the borrower has high actual expenses documented by a CPA, bank statements + P&L letter may produce better qualifying income than the flat 10% factor.
Non-QM decisions typically within 48 hours of a complete file. Check current turn times before locking.
Price it in the Quick Pricer, download the matrix, or call your AE. We Deliver.
