The Quick Read: Usually, yes: a hard money flip loan is business-purpose credit sized to the property, the rehab budget and the exit, so a borrower paid only on 1099s is not shut out for lacking W-2s, provided the LLC is properly formed, the guarantor has acceptable credit and cash, and the deal’s numbers work. Approval stays subject to lender guidelines and is never a commitment to lend.
- The lender sizes the loan to the property and the project, not to your 1099 income.
- The LLC is the borrower, and you usually sign a personal guarantee behind it.
- Expect to show credit, cash to close, reserves and a clear plan to sell or refinance.
- A 1099 mortgage is a different product, built for personal residences.
- Programs vary by lender, property and experience, so ask for the document list up front.
Why the 1099 Label Matters Less Here
A flip loan asks whether the deal makes sense. A 1099 mortgage asks whether your income can carry a household payment. Those are two different questions, and each product answers only one of them.
What this loan actually costs to carry.
Hard money is sized against the project and priced by time. Enter the deal and see how much the program will lend, the cash required at closing, the carry while you hold it, and what is left at the exit.
Leverage tiers on the current program: 85% with fewer than 2, 90% with 2 or more, 93% with 5 or more completed projects — every tier capped at 75% of after-repair value. Loan amounts up to $5,000,000, larger by exception; terms of 6 to 18 months, interest-only, no prepayment penalty. The rehab portion funds in draws against completed work, not at closing.
Program parameters shown update from Lendmire’s centralized guideline source. Rate, points, and months are editable assumptions, not quoted terms.
Cost cap sets the loan · positive spread
Illustrative estimate only — not a quote, Loan Estimate, approval, or commitment to lend. Rate, points, and months are editable assumptions. Hard money is business-purpose financing for real estate investors, not a consumer mortgage. Leverage on the current program tops out at 93% of project cost for investors with a documented track record, capped at 75% of after-repair value, with rehab funding up to 100% of the documented budget released in draws; actual terms vary by lender, borrower experience, property, and exit. Lendmire is a mortgage broker, not a lender.
A 1099 mortgage is a non-QM (non-qualified mortgage) loan, meaning it sits outside standard agency rules. It averages your gross 1099 income over a stretch of months to prove you can repay. A flip loan skips that exercise. BiggerPockets describes hard money as asset-based financing used for flips, bridge loans, rentals and new construction. Approval turns on whether the property is a profitable investment.
| Factor | 1099 mortgage | Hard money flip loan |
|---|---|---|
| Purpose | Personal residence | Business-purpose investment |
| Main test | Averaged 1099 income | Property, budget, exit |
| Borrower | Individual | Usually an LLC |
| Cash proof | Reserves | Cash to close and reserves |
| Term | Long-term | 6-18 months, interest-only |
The 1099 may still be requested as background. It rarely decides the outcome.
What Do Lenders Review Instead of Income?
They review the deal first and the guarantor second. Across the wholesale network we place files with, five items carry most of the weight.
1. The property. It should be non-owner-occupied residential, one to four units, on the program sheet.
2. The purchase contract and the as-is value. This is the starting number for the loan.
3. The rehab scope and budget. Itemized lines beat round numbers every time.
4. After-repair value (ARV). That is what the property should be worth once the work is done, supported by comparable sales.
5. The exit. The lender wants to see a believable spread between total cost and ARV, whether you sell or refinance.
The guarantor then gets a look at credit, liquidity and track record. Lenders typically size the loan off both the as-is value and the ARV, and the lower result controls. Underwriting is asset-based, but asset-based is not the same as no review.
Why Use an LLC, and What Comes First?
Closing in an LLC is standard for flips, and a 1099 earner can do it. The LLC changes who holds title and who signs the note. It does not remove the people behind it from review. Many 1099 workers have never run an entity, so order matters.
1. Form the LLC. File with your state and sign an operating agreement that names who can sign for the company.
2. Get an EIN. This is the entity’s federal tax ID.
3. Open a business bank account. Use it for the project from day one.
4. Move your cash into that account early. Do this before you apply, not the week you need proof of funds.
5. Keep the LLC separate. Pay project costs from the LLC account, not your personal one.
Lumpy 1099 deposits and personal-versus-business commingling cause real trouble in cash verification. A clean business account with sourced deposits avoids most of it.
How Does the Personal Guarantee Work?
A personal guarantee means you agree to answer for the loan if the LLC cannot. Most flip loans carry one. That is how your personal file stays tied to the deal even though the LLC is the borrower.
Plan on these points:
- Who signs. Usually every owner with meaningful ownership, or at least the managing member.
- What it ties together. The lender reviews your credit and cash, not the LLC’s credit history.
- Recourse. Non-recourse is mostly a feature of longer-term rental loans, so do not count on it for a short flip loan.
A new LLC has no credit of its own. The lender looks at you.
What Leverage and Credit Should You Expect?
Program details vary by lender, property and experience, and the figures below are typical of what we see rather than a promise. Leverage on a fix-and-flip steps up with documented completed projects:
- Fewer than two completed projects: up to 85% of project cost.
- Two or more: up to 90% of project cost.
- Five or more: up to 93% of project cost.
- Every tier: capped at 75% of after-repair value.
Those are loan-to-cost figures, not purchase LTVs. Up to 100% of the rehab budget funds in draws against completed work, so renovation money does not arrive at closing. Refinance and cash-out files typically top out near 65% of value. Loan amounts run up to $5,000,000, larger by exception. Terms are 6 to 18 months, interest-only, with no prepayment penalty.
Credit starts at a 620 minimum score, with added conditions below 660. First-time investors can qualify at the lower leverage tiers. The top tier is reserved for experienced investors. For a 1099 earner, this is the useful part: experience and credit move the tiers, and tax-return income does not appear on the list.
Which Documents Should a 1099 Borrower Have Ready?
“No income docs” does not mean no docs. Lenders still want identity, entity papers, a budget and proof of cash. Ask for the lender’s checklist before you apply, because programs differ.
| Item | Why it is asked | 1099 tip |
|---|---|---|
| Operating agreement, EIN | Shows who can sign | Form the LLC before the contract |
| Government ID | Identifies the guarantor | Match names across all papers |
| Bank statements | Proves cash and reserves | Source large deposits in writing |
| Purchase contract | Sets the as-is value | Confirm the buyer is the LLC |
| Rehab budget | Sizes the draws | Itemize by trade |
| ARV comps | Supports the exit | Use recent, nearby sales |
| Track record | Sets the leverage tier | List completed projects |
| 1099s | Background only, if requested | Offer them; do not lead with them |
Bank statements here prove liquidity. They are not an income test.
Three Borrower Scenarios
These are hypothetical profiles, shown without dollar figures.
The first-time flipper. Picture a 1099 contractor with solid credit, cash in a new LLC account and no completed projects. The file lands in the lowest leverage tier, up to 85% of project cost and capped at 75% of ARV. The lender cares most about the budget and the comps. Income barely comes up.
The heavy write-off earner. Say you own a design practice paid on 1099s, and your traditional personal-income documentation shows modest net income after deductions. A conventional or income-based loan might read you poorly. A flip loan sized on the deal does not penalize that. Your credit, your cash and the spread still have to hold up.
The thin-cash earner. Consider an earner with strong deposits but little liquid cash after living expenses. The leverage may be fine, but cash to close and reserves are the gap. This file often needs a smaller project, a partner, or a longer savings runway. A higher tier will not fix a liquidity shortfall.
Why Do 1099 Files Stall?
Most stalls come from paperwork and cash, not from the income label. The usual causes:
- The LLC is formed after the contract is signed. Title and the contract then name different parties.
- Personal and business funds are mixed. The lender cannot trace the cash.
- The budget is vague. Round numbers do not support draws.
- The ARV rests on weak comps. Distant or stale sales shrink the loan.
- The purpose is poorly documented. More on that next.
Each of these is fixable before you apply. After the deal is under contract, they cost real time and goodwill.
One Business-Purpose Rule Worth Knowing
Flip loans are designed for non-owner-occupied investment properties. Because they are business-purpose investor loans, they are reviewed differently from a standard owner-occupied mortgage. An LLC alone does not settle that treatment, though.
The OCC’s Comptroller’s Handbook says a checked business-purpose box, without documentation of how the proceeds will be used, may not be enough evidence. It also notes that the closer the match between your occupation and the purchase, the more likely the loan reads as business-purpose. A law-firm explainer from Doss Law adds that if you expect to occupy the property more than 14 days in the coming year, it can be treated as consumer credit unless the property has more than two units. It also cautions that hobbyist flippers can struggle to show the required business activity.
In practice, you keep the LLC capitalized and the paper trail clean, and you do not plan to live in the property.
If Hard Money Is Not the Fit
Hard money suits a short project with a clear exit. If that is not your situation, other paths may serve you better.
| Situation | Option to compare |
|---|---|
| Holding the property as a rental | DSCR loan, qualified on rent |
| Buying a personal home | 1099 mortgage |
| Short on cash to close | A partner, or a smaller project |
| Cashing out equity from a rental | Cash-out refinance, 75% LTV on most standard rentals |
Many investors refinance out of hard money into long-term DSCR financing once the property is stabilized. A DSCR loan is reviewed primarily on property-level rental income covering the payment, subject to lender guidelines. Lendmire brokers that path, and the complete DSCR loans guide explains how it works. If your income is 1099-only and you are weighing a cash-out instead, Lendmire’s comparison of a 1099-only loan and hard money for a conventional cash-out refinance lays out the tradeoffs.
Key Terms Defined
Hard money loan: a short-term, asset-based loan from a private or specialty lender, sized mainly to the property.
Business-purpose loan: credit used for an investment or business activity rather than personal or household use.
1099 income: earnings paid to you as an independent contractor rather than as a W-2 employee.
Personal guarantee: your personal promise to repay if your LLC cannot.
ARV (after-repair value): the estimated value of the property once the renovation is finished.
Draw: a release of rehab funds after inspected, completed work.
This article is general information, not legal or tax advice, so consult a qualified attorney or CPA about your own situation; tax treatment varies, and a qualified professional can speak to how it applies to you.
Frequently Asked Questions
Do I need traditional personal-income documentation for a hard money flip loan?
Often not, because underwriting is asset-based. Some lenders still ask for them or for other proof of income, so requirements differ by program. Ask for the document list before you apply and treat any no-document promise with caution.
Can a brand-new LLC be the borrower?
Yes, in most cases. A new LLC has no credit history, so the lender looks at you as guarantor. Form the entity before you sign the purchase contract so the names match throughout.
Does gross or net 1099 income matter?
Generally neither decides a flip loan. Income-based products such as 1099 mortgages weigh gross income, while a flip loan weighs the deal, your credit and your cash. A low net after write-offs is not the barrier it can be elsewhere.
Does the LLC protect me from the personal guarantee?
No. The guarantee exists so your personal assets stand behind the loan if the LLC defaults. Read it carefully and discuss it with an attorney before signing.
Can I do my first flip with this kind of loan?
Yes, first-time investors can qualify at the lower leverage tiers, subject to a 620 minimum credit score with added conditions below 660. Experience raises leverage, and the strongest tiers are reserved for experienced investors.
What Next?
If you are buying, rehabbing or refinancing an investment property on a short timeline and want to see how the numbers work, Lendmire can help you compare hard money options based on the project, the exit plan, leverage, and your goals. The brokerage arranges financing through select lenders in its wholesale network across 41 markets, including Washington, D.C.
For current guidelines and terms, see Lendmire’s DSCR loan programs page.
About Lendmire
Lendmire — NMLS# 2371349 — is a mortgage brokerage specializing in DSCR investor loans, helping arrange financing across 41 markets, including Washington, D.C., through wholesale and investor-lending channels. The model centers on property-level rental income reviewed by the lender rather than W-2 documentation, subject to lender guidelines, suiting entity-owned and multi-property investors. Lendmire holds Scotsman Guide Top Mortgage Workplace recognition for 2025 and 2026.
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References
2. OCC Comptroller’s Handbook, Truth in Lending Act
3. Doss Law, Business Purpose Exemption Simplified
This article is part of Lendmire’s hard money loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Hard Money Overrun Documentation for a BRRRR Rehab Into a DSCR Loan · DSCR Loan Requirements for a Syndication or Multi-Member LLC · Can You Use a Hard Money Loan to Buy Out Siblings or a Partner?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Compliance and disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage broker and is not a direct lender, depository institution, financial advisor, or tax professional. Content in this article is general market analysis and educational information — not financial, legal, or tax advice for any specific situation. Lendmire does not guarantee loan approval; every transaction is subject to underwriting by the funding lender. Mortgage pricing and loan program guidelines are subject to change at any time without notice and vary by borrower characteristics, property type, and state regulations. Lendmire complies with Equal Housing Opportunity. Licensure verification: NMLS Consumer Access.