A 1099 loan’s cost depends heavily on which path you use. If you qualify through standard, tax-return-based underwriting using your net 1099 income, you get conventional pricing and down payment options, as low as 3% to 5% down.
If you use a dedicated 1099-only program that qualifies you on gross income instead, without tax returns, you’ll pay a non-QM rate premium, generally 0.5 to 3 percentage points above conventional, along with a larger down payment, typically 10% to 30%.
Rate figures in this article reflect general market ranges as of late September 2026 and change frequently with market conditions. Always confirm current pricing with a lender before making a decision.
TL;DR
There isn’t one single “1099 loan rate,” because 1099 borrowers actually have two different pricing paths. Qualifying with your net income through standard underwriting keeps you in conventional pricing and down payment territory. Qualifying with your gross income through a dedicated 1099-only program gets you a higher qualifying income, but at a non-QM rate premium and a larger down payment.
Which path costs less overall depends on your specific write-offs, credit score, and how much down payment you can put down.
Does Your Rate Depend on Which 1099 Program You Use?
Yes, and this is the single biggest factor in what your 1099 loan actually costs. If you qualify through standard, tax-return-based underwriting, using your net 1099 income after Schedule C deductions, you’re generally getting a conventional loan, with conventional pricing and down payment options.
If you use a dedicated 1099-only program that qualifies you on 90% to 100% of your gross 1099 income instead, without requiring tax returns, you’re in non-QM territory, with non-QM pricing.
This means the question “how much does a 1099 loan cost” doesn’t have one universal answer. Some lenders will actually run both calculations for you and present whichever produces the higher qualifying income, which is a useful way to see both the cost and the qualifying income side by side before you choose.
Learn what a 1099 mortgage is and how it works. If you have no W-2 income at all, see whether you can still get a mortgage with 1099 income and no W-2.
How Do 1099 Mortgage Rates Compare to Conventional Rates?
As of late September 2026, average 30-year conventional mortgage rates have moved above 7%, with Freddie Mac’s most recent weekly survey putting the 30-year fixed-rate average at 7.03%. Dedicated 1099-only programs, since they’re non-QM products not sold to Fannie Mae or Freddie Mac, generally carry a rate premium above that, commonly in the range of 0.5 to 3 percentage points, depending on your credit profile, down payment, and the specific lender.
Your credit score is one of the biggest levers here.
Stronger credit profiles, generally 740 and above, tend to land toward the lower end of that premium range, while borrowers with a minimum qualifying credit score, often around 620 for 1099-only programs, tend to land toward the higher end.
Because both conventional and non-QM rates move with the broader market, getting an actual, current quote is more reliable than relying on a fixed number for long. For more knowledge, compare the expenses for bank statements and conventional.
How Much Down Payment Do You Need for a 1099 Loan?
If you qualify through standard, tax-return-based underwriting, your down payment options are the same as any conventional borrower’s, potentially as low as 3% to 5% for a qualified buyer. If you use a dedicated 1099-only program, expect a meaningfully larger down payment requirement, generally in the 10% to 30% range, with many lenders setting a 10% minimum for primary residences.
A few factors that typically affect where you land in that range:
- Credit score. Higher scores generally unlock lower down payment requirements within a 1099-only lender’s program.
- Property type. Primary residences generally have the lowest down payment requirements; investment properties typically require 20% to 25% or more.
- Loan features. Programs with interest-only payment options often require a higher minimum credit score (commonly 700+) and cap the maximum loan-to-value ratio lower than standard amortizing loans.
- Lender-specific overlays. Non-QM guidelines vary more by lender than conventional guidelines do, so the same borrower profile can see different down payment requirements from different 1099-only lenders.
What Other Costs Come With a 1099 Loan?
Beyond the interest rate and down payment, 1099 loans generally come with standard mortgage closing costs, plus a few considerations specific to which path you use.
Costs to expect:
- Standard closing costs. Origination fees, appraisal, title insurance, and other typical closing costs apply to 1099 loans just as they would to a conventional mortgage.
- Reserve requirements. Many non-QM 1099-only lenders require borrowers to show liquid reserves, savings equal to several months of the mortgage payment, particularly for higher DTI or interest-only loan structures.
- Non-QM program fees. Some 1099-only lenders charge slightly higher origination or underwriting fees than conventional lenders to account for the more manual underwriting process these loans require.
- Investment property premiums. If you’re financing an investment property rather than a primary residence, expect both a larger down payment and potentially a modestly higher rate.
None of these are typically dramatic differences individually if you qualify conventionally, but if you’re using a dedicated 1099-only program, they add up alongside the rate premium and larger down payment to a meaningfully higher total cost of borrowing.
What Affects Your 1099 Loan Pricing?
Your specific 1099 loan pricing is shaped by which program you qualify for, your credit score, your down payment size, and your loan amount.
| Pricing Factor | How It Affects Your 1099 Loan Pricing | Impact on Rate |
|---|---|---|
| Which program you use | This is the single biggest driver. Standard, tax-return-based qualification gets conventional pricing. A dedicated 1099-only program gets non-QM pricing. | Highest |
| Credit score | Non-QM 1099-only programs generally set minimum credit score requirements around 620, but rates improve meaningfully as your score climbs. The strongest pricing is typically reserved for scores in the 740+ range. | High |
| Down payment size | A larger down payment reduces the lender’s risk and typically results in a better rate. This matters most on 1099-only programs, where the standard range starts around 10% and can go up to 30%. | High |
| Loan amount and property type | Investment properties and larger loan amounts generally price somewhat higher than primary residence loans at a standard loan amount. | Moderate |
Rates and terms vary by lender, borrower profile, and market conditions. Figures shown are general program ranges, not a rate quote.
Can You Refinance Out of a 1099-Only Loan Later?
Yes. Many borrowers use a 1099-only loan as a bridge, qualifying now on their gross income to get into a home, with the intention of refinancing into a conventional mortgage later once their tax returns reflect enough net income to qualify conventionally, or once their financial picture otherwise becomes easier to document through standard underwriting.
This strategy works best when two things happen together: conventional market rates are favorable at the time you refinance, and your documentation has improved enough to qualify conventionally. If only one of those conditions is true, the benefit of refinancing may be smaller than expected.
It’s worth discussing this possibility with your loan officer at the time you take out the 1099-only.
Cost Comparison at a Glance
| Factor | Standard Underwriting (Net Income) | 1099-Only Program (Gross Income) |
|---|---|---|
| Income basis | Net income after Schedule C deductions | 90-100% of gross 1099 income |
| Interest rate | Conventional market rate | Non-QM premium, roughly 0.5-3 points above conventional |
| Down payment | As low as 3-5% for qualified borrowers | Typically 10-30%, often 10% minimum |
| Credit score minimum | Generally 620+ | Generally 620+, best pricing above 740 |
| Tax returns required | Yes | No |
| Secondary market | Sold to Fannie Mae/Freddie Mac | Sold to private investors; non-QM |
| Best fit | Modest write-offs, income already reflects real earnings | Significant write-offs that shrink net income below real earning power |
This comparison is directional and reflects general market conditions rather than a specific quote. Rates and terms change frequently, so use this to understand the shape of the cost difference rather than as pricing you can rely on.
When Paying More Means Qualifying for More
A 1099 marketing consultant grossed $180,000 last year but deducted $70,000 in legitimate business expenses, leaving $110,000 in net income.
His loan officer ran his numbers two ways: standard underwriting using the $110,000 net figure at a conventional rate with 5% down, and a dedicated 1099-only program using 90% of his gross income, roughly $162,000, at a non-QM rate about 1.5 points higher with 10% down.
The 1099-only program’s higher rate and down payment meant a bigger monthly payment and more cash needed at closing, but it also qualified him for a meaningfully larger loan amount, enough to afford the home he actually wanted rather than a smaller one that fit his net-income qualifying amount.
He chose the 1099-only program, with a plan to revisit refinancing into a conventional loan in a year or two once he had additional 1099 history and could show a stronger combined income picture.
“The higher cost of a 1099-only program isn’t automatically a bad deal. For some borrowers, it’s the difference between qualifying for the home they want now versus a smaller one, or waiting years for their tax returns to catch up.”
— Charlie Cooper, President, Austin Capital Mortgage
How to Compare 1099 Mortgage Options
- Ask your loan officer to run your numbers both ways. Compare your net-income qualifying amount under standard underwriting against your gross-income amount under a 1099-only program before choosing.
- Check your credit score. Since pricing is closely tied to credit on both paths, knowing where you stand helps you anticipate your rate range.
- Decide how much you can put down. The down payment gap between standard (as low as 3-5%) and 1099-only (typically 10%+) is significant; know which range you can realistically afford.
- Calculate the real monthly cost difference, not just the rate. Ask your loan officer to show you the actual dollar difference in payment between both paths for your specific loan amount.
- Ask about a refinance plan if you choose the 1099-only path. Understand what would need to change, in your documentation and in the market, for a future refinance to make sense.
Ready to see your actual numbers side by side?
Want to See Which 1099 Loan Path Actually Costs Less for You?
The right answer depends on your actual numbers, your write-offs, your credit, and your down payment, not a general rule. At Austin Capital Mortgage, we can run your qualifying income and pricing both ways so you can see the real trade-off before you decide.
Austin Capital Mortgage works with 100+ lenders, a hybrid banker and broker model, which means more program access and more flexibility to find the path that fits the borrower’s actual file.
Try our mortgage calculator and affordability calculator.
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