If you are self-employed and need a high-quality jumbo mortgage, our 1099 loan program may be the perfect option for your next home purchase!
Our 1099 Loan Program Makes Home Loans More Affordable
There are many advantages to using this program, including the potential for a large loan, a low downpayment, affordable rates, and a lenient DTI requirement.
Up to $3.5 Million in Financing
Home prices are rising, and even moderate homes in certain areas are out of reach for many American who want to use a conforming loan, which includes VA loans, FHA loans, and Fannie Mae-supported loans.
Getting a “jumbo loan,” which is above the maximum limits of a conforming loan, can be tough for any buyer. For self-employed buyers who need to use 1099s, it can be even more difficult.
With this 1099 loan program, however, you can secure up to $3.5 million in financing using your self-employed tax documents.
10% Downpayment to loan amount of $1,000,000
Jumbo loans often require larger downpayments, which helps mitigate the inherent risk of these larger loans. In many cases, the requirements are as high as 20%, which equals $200,000 for every $1 million in purchase price.
With these loans, however, you can significantly reduce the downpayment requirements if your loan is $1 million or less. So you may only need $100,000 if you are getting a loan up to $1 million.
The upfront costs of homeownership are often a burden. When you consider that 1099 and jumbo loans often require large downpayments, 10% down is quite reasonable.
55% Debt-to-Income Ratios Allowed
If you use this 1099 loan program, you may be able to secure financing even if you have a debt-to-income ratio (DTI) of 55%. DTI, which is one of the most important factors for loan qualification, looks at your monthly debt payment (not your debt total) compared to your monthly income. If a quarter of your monthly earnings go to debt payments, your DTI is 25%.
Most loan programs, even conventional and conforming loans, cap the DTI around 45%; having an allowable DTI of 55% is fairly uncommon.
The bottom line is simple: if you need a large mortgage based on your 1099 documents, but you also have significant existing debt payments, these loans make financing possible.
Low Interest Rates Make The Home More Affordable
Interest rates matter, especially on a large loan of over $1 million. The interest rate on a home loan is based on numerous factors, including outside factors (federal interest rates, for example), as well as personal factors. (Credit, DTI, and downpayment can all impact interest.)
That said, these loans tend to have lower interest rates than other forms, such as bank statement loans.
Just how much can a low interest rate impact your overall costs? Using our mortgage calculator, let’s assume a 30-year loan of $2.5 million with an interest rate of 4%. Under these simplified conditions, you have a monthly P&I (principle and interest) payment of $11,935. But if we reduce that to 3%, the P&I is reduced to $10,540.
That’s a difference of $1,395 a month. Over the course of a year, it means $16,740 in savings. If you keep the loan for the full 30 years, you’re looking at over $500,000 in savings!
A 1% drop is fairly large, and this is a highly simplified example. But it demonstrates just how much interest can impact total costs, especially on a jumbo loan.
Stellar Credit Not Required
For many jumbo loans, you need a a high credit score. But with this 1099 program, you can actually secure financing with a score as low as 620.
A 620 score is not low. Neither is it high. According to Experian, a 620 score is “fair.” It’s not good, very good, or exceptional. Merely fair. This means that if you have a few dents in your credit history but you are mostly responsible with your debt load (i.e. you’re a regular person), your credit will likely not disqualify you from these loans.
Flexible Income Document Requirements
These loans are largely based on 1099 documents, which form the foundation of the income listed on the application. However, the documents tend to be fairly flexible. With this program, you can use the most recent year or two years of 1099 income, whichever is higher.
This creates greater flexibility and may allow you to purchase a home when other loans are unavailable.
Purchase a Property for Almost Any Purpose
When you use these loans, you can purchase a property for just about any purpose. Most commonly, of course, people will use these loans as financing for their primary home. However, you can also use these loans to purchase a second home. Need a metropolitan condo near work? These loans may be able to help. Want a 1099 jumbo loan for a vacation property? These loans could do the trick.
They are also available for investment purchases, allowing you to build an income-generating property portfolio.
Not Just for Purchasing
This 1099 program can even be used as a way to refinance your current loan. If you have a loan balance over the conforming limits, and need a better interest rate or want to utilize your equity, this program can help.
First Time Homeowners Welcome!
Some jumbo loans require previous homeownership and mortgage experience, but this is not the case with this program. These 1099 loans allows you to take advantage of all the benefits we have listed above, and all you need is 12 months of rental history.
Rental Income Allowed
One of the top benefits for using these loans is that you can secure financing with future rental income.
If the property has an ADU, you can secure financing using 75% of the appraisers market estimate for the property. If you choose to make the property into a short-term rental, income can be used and it will be averaged over 12 months. If you refinance, room rents on tax returns can be used.
This makes the loans even more accessible and useful for many borrowers.
Use Our 1099 Loan Program for Your Next Home
If you want to learn more about our 1099 loan program, contact our staff today. We have the experience, knowledge, and dedication to help you find the perfect mortgage!
