Newly a 1099 Employee? How You Could Qualify for a Mortgage with Newfi Lending’s W2 to 1099 Program

If you’ve recently switched from a W2 job to a 1099 (contractor) role or are about to you may be wondering how this impacts your ability to qualify for a home loan. Traditionally, lenders focus on a full two-year history of 1099 income or multiple years of W2 income. But with Newfi Lending’s specialized W2-to-1099 program, you could become eligible for a mortgage sooner than you might expect.

What is the “W2 to 1099” Program?

Newfi Lending offers a unique path for qualified borrowers who were employed on a W2 basis and then switched to being paid as a 1099 contractor in the same line of work.

• You do not need to wait the usual 12 to 24 months before using your 1099 income.
• You could count 100% of your 1099 income (if you meet the expense-free criteria) even with just your first 1099 check and an offer letter.
• Two years of W2 history are reviewed, but the emphasis is on treating your 1099 as full-income rather than holding you to traditional self-employed tax return rules.
• Minimum Down Payment is 10% on a purchase and no mortgage insurance is required!

This could be a game-changer if you were recently converted to a self-employed contractor status (for example, a nurse who changed to travel-nurse 1099, or a mechanic who switched to 1099 with the same type of work).

Why this Matters for a Newly 1099 Employee

1. Traditional hurdles for 1099 borrowers

Many contractors struggle to qualify because:

• They are doing the same type of job as before, but the only difference is their pay structure, but when it comes to qualifying for a mortgage, they’re now looked at as self-employed.
• Self employment usually requires a 1-2 year history of being self employed to use that income easily.
• Lenders who don’t specialize in Non-QM offerings often don’t offer a program that helps this situation.

2. The W-2 to 1099 program with Newfi Lending solves these issues

• Since you had W2 income in the same field, your “employment stability” is already established. No minimum history is required.
• As long as your new contractor role is in the same line of work and the employer confirms you’re not responsible for job-related expenses, you could treat your new 1099 as full income.
• We often see service providers like hairdressers or nail technicians, or medical professionals like nurses, doctors, or dental assistants utilizing this program after a change in their pay structure.

How To Qualify for a Mortgage After Changing From W-2 to 1099 Work

Here are the important criteria to keep in mind:

• Same line of work: Your new contractor or 1099 role must align with your previous W2 role (same industry type).
• Offer letter or pay stub: The employer or contracting entity should provide an offer letter, VOE (verification of employment), or first pay stub that shows the 1099 arrangement and confirms you are not responsible for job-related expenses.
• Expense-free status: If you have no job-related expenses (i.e., you aren’t responsible for purchasing equipment, materials or training), you may use 100% of the 1099 income when qualifying.
• Down Payment on Purchases: Minimum of 10%
• Maximum LTV on Cash-Out: Maximum of 80%
• Maximum Debt-to-Income Ratio: Maximum of 55% DTI
• Credit score requirements: Credit scores down to ~620 may be eligible, but better credit scores yield more opportunities to qualify for lower down payment requirements. We use the primary wage earner’s middle credit score as the credit score for pricing and qualification.
• Combine incomes: You can combine the income from the new 1099 employee with a co-borrower’s income like a spouse with a standard W-2 job. This helps you maximize your options to when purchasing a home or refinancing your current home.

Example: Nurse Who Now Gets Paid Via 1099

Let’s say you worked as a W-2 nurse for 5 years; today you switched to a 1099 contract for a travel-nurse agency, doing the same kind of work you did before. You received your first 1099 payment, have a contract, and your FICO is ~740. You’d like to purchase a home with a 10% down payment.

With the W2-to-1099 program that Newfi offers:

• You present your W2 history and your 1099 offer/contract.
• Newfi confirms you aren’t responsible for job-related expenses.
• You may be eligible to use 100% of your 1099 income, use your full work history to meet requirements, and move ahead — without needing 12+ months of 1099 history.

Result: You could be approved with ease, provide less documentation and move into your new home faster with this specialized program made for nurses like you!

Why Choose Newfi Lending?

• Newfi Lending understands these scenarios and designed a W-2 to 1099 program specifically for people like you to purchase or refinance their homes.
• They offer competitive pricing that helps you afford your next step.
• They offer dedicated support to guide you through the documentation and underwriting nuances for 1099 and W2-to-1099 paths.

Next Steps if You’re a Newly 1099 Employee

1. Contact a loan officer at Newfi Lending to discuss the W2-to-1099 path, confirm your eligibility, and explore your options to get prequalified for a mortgage approval.
2. Gather your documentation: W2s for the prior 2 years, offer letter/contract for your new 1099 role, first pay stub or 1099 (if available).
3. Work proactively with your loan officer and realtor (if applicable) to run scenarios and find your best fit for mortgage loan financing.

Ready to Buy After Switching to 1099?

See if you qualify under the W2-to-1099 program!  Fill out the form below!