If you’ve recently moved into a contractor position from a W-2 role, finding a mortgage lender who will accept your income can feel nearly impossible. As a loan officer with over 20 years of experience, I’ve seen the way changes to income documentation delay perspective self-employed homebuyers for years. This is due to mortgage lenders traditionally requiring at least 2 years of invariable income documentation such as W-2’s, bank statements, or 1099’s, to qualify.

While 2 years of income documentation is still industry standard, Newfi Lending’s specialized W-2 to 1099 Mortgage makes homeownership more accessible. Now, for homebuyers in the same line of work who have recently switched from a W-2 role to a 1099 one, can easily qualify—no waiting and no delays!

A W-2 to 1099 Mortgage is a mortgage solution designed to qualify borrowers who were employed on a W-2 basis, moved to a 1099 contractor position in the same line of work, typically at the same employer, and have no expenses. With W-2 to 1099 mortgages for contractors, you don’t have to worry about waiting 1 to 2 years before using your 1099 income. Qualified borrowers can access homeownership using 100% of their 1099 income even if they’ve only cycled through their first pay period.

Every mortgage loan has specific program guidelines that must be met in order to qualify. For example, if you’ve recently switched from a W-2 position to a 1099 role, the new 1099 role must align with your previous W-2 work experience. Typically, this means you’ll be in the same industry in your new role as you were in your previous one.

Here are a few other qualifying requirements that are important to keep in mind:

• Loan Amounts to $5M
• Letter from Employer or Contract Stating No Expenses are Incurred
• A Little as 10% Down on Purchases
• 80% Max Loan-to-Value (LTV) on Cash-Out
• 50% Max Debt-to-Income Ratio (DTI)
• Credit Scores as Low as 660 in some scenarios
• Available on Primary, Second Homes, and Investment Properties

For contractors with multiple income types, or co-borrowers, Newfi’s W-2 to 1099 program makes it easy for you to combine income documentation to qualify!

Recently, I helped a surgeon qualify for a mortgage using this exact program! She met our qualifying requirements but was concerned about her income documentation. She’d been a surgeon 7 years in a W-2 role at a hospital but had recently moved to a 1099 payroll structure with the hospital.

She provided us with the following documentation:

• First 1099 paycheck
• Previous W-2 income from prior position
• A copy of the contract which the hospital stated she did not incur work-related expenses

From there, the process was straightforward. We were able to review her income and get her approved without issue!

If you’re worried about qualifying for a mortgage after moving from a W-2 role to a 1099 position, there is a straight-forward mortgage solution for you. If have any questions or would like to start looking at your options, fill out the form below to connect with me or one of Newfi’s other loan officers!