The Quick Read: Yes, a 1099 contractor can generally get a hard money fix and flip loan, because these loans are underwritten on the property, the rehab plan, and the exit rather than on traditional employment income or tax-return ratios, subject to lender guidelines.
- Approval turns on the deal: purchase price, rehab budget, after-repair value (ARV), and a credible exit.
- Credit still matters: a 620 minimum score is typical, with added conditions below 660.
- Liquidity and entity paperwork replace pay stubs and traditional personal-income documentation.
- Experience sets leverage more than eligibility; first-time flippers qualify at the lower tiers.
- A later DSCR refinance can hold the property as a rental without personal income as the test.
Why Doesn’t 1099 Income Decide the Approval?
Hard money is asset-based, so the lender is underwriting the project, not the paycheck. A 1099 earner is not penalized for being paid that way.
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.
The IRS treats an independent contractor as self-employed, and payers generally report that pay on Form 1099-NEC. That is a tax status. It is not a lending bar.
Across Lendmire’s wholesale network, hard money files are built around four questions. Does the ARV hold up against comps? Is the rehab budget line-itemed and realistic? Does the cost-to-value math leave room for profit? Is there a believable exit? Those answers carry the file.
Here is the catch. Not every lender behaves the same way. Some ask for very little beyond identity, liquidity, and entity documents. Others want a bank statement review or a short profile of your business. Program terms vary by lender, property, and experience, and nothing here is a commitment to lend.
These are business-purpose investor loans, reviewed differently from a standard owner-occupied mortgage. The CFPB’s rulemaking treats investment-purpose loans as business-purpose, which is why income and DTI documentation rules for consumer mortgages are not what drives this product.
What Do Lenders Review Instead?
They review the property, the plan, your liquidity, your track record, and your credit. Here is how a contractor can show each one.
| Factor | Why it matters | How a contractor shows it |
|---|---|---|
| Property and ARV | Collateral value | Comp pack, as-is and ARV values |
| Rehab budget | Draw sizing | Line-item scope, contractor bids |
| Experience | Sets leverage tier | Completed-project summary |
| Liquidity | Cash to close and carry | Bank statements |
| Entity | Clean borrower structure | LLC agreement, EIN |
| Credit | Borrower-side gate | Score of 620 or higher |
Leverage is where experience shows up. Fix-and-flip leverage typically runs up to 93% of project cost at 5+ completed projects, 90% of project cost at 2+, and 85% with fewer than two, with every tier capped at 75% of after-repair value. Up to 100% of the rehab budget funds in draws against completed work. That is a rehab-budget figure, not a purchase LTV, and there is no true 100% purchase program. All of this varies by lender, property, and experience.
Collateral is non-owner-occupied residential property, 1-4 units. Loans can reach $5,000,000, larger by exception. Terms run 6-18 months, interest-only, with no prepayment penalty.
Is a 1099 Loan the Same Thing?
No. A 1099 income loan is a different product from hard money. The confusion is common, so it is worth drawing the line.
A 1099 income mortgage qualifies a borrower on documented income, typically for a home they will live in. Hard money for a flip qualifies the deal. A DSCR loan, the usual exit, qualifies primarily on property-level rental income covering the payment, subject to lender guidelines.
| Product | What it qualifies | Typical use |
|---|---|---|
| Hard money flip loan | Property, plan, exit | Buy and renovate to sell or refinance |
| 1099 income mortgage | Documented contractor income | Owner-occupied purchase |
| Bank-statement loan | Deposits as income proxy | Self-employed primary or second home |
| DSCR loan | Rent vs. full monthly obligation | Long-term rental hold |
If you are shopping for a flip and a lender pitches a 1099 program, ask which product it is. Wrong product, wrong underwriting.
How Does the Process Work Step by Step?
The path runs from entity setup to payoff, and the borrower file is mostly non-income.
1. Confirm business purpose. The property must be non-owner-occupied and acquired to renovate and sell or rent. The CFPB’s TILA summary notes that credit extended primarily for a business purpose is exempt from Regulation Z.
2. Form the entity. Many investor lenders want an LLC, subject to program requirements. Gather the operating agreement and EIN.
3. Build the file. Typical items are ID, the purchase contract, a comp pack, a scope of work with bids, bank statements for cash to close and carry, and a track-record summary.
4. Appraisal. The property is valued as-is and at ARV.
5. Close and draw. Rehab funds typically release in draws after inspections.
6. Exit. Sell, or refinance. Many investors refinance out of hard money into long-term DSCR financing once the property stabilizes, and Lendmire brokers that path.
Business purpose is a fact test, not a label. If part of the loan covers personal expenses, the consumer rules can come back into play. Keep the use of funds clean.
Does Being the Contractor Help or Complicate the Deal?
Both. Your trade is a credibility asset, but it creates one wrinkle lenders look at closely.
The upside is real. A contractor can write a realistic scope, price labor accurately, and explain the schedule. Lenders read that as lower execution risk. Experience still sets your leverage tier, though, so a strong trade résumé does not by itself move you up.
The wrinkle is the draw process. When the borrower is also the builder, lenders typically want the scope documented in detail, inspections before each release, and clear separation between your labor and any subcontractors. Expect more paper on who is doing what, not less.
This one’s a genuine tradeoff. Self-performing work can widen profit, but it can also stretch the timeline when your 1099 jobs compete with your own flip for your hours. A 6-18 month term is interest-only and unforgiving about slippage. Budget the schedule as if you had a second job, because you do.
A Worked Example (Percentages, Not Payments)
Picture a contractor with one completed flip who finds a distressed duplex. With fewer than two completed projects, the file sits in the 85% of project cost tier, capped at 75% of ARV. The contractor brings the remainder as cash, shows it in bank statements, and submits a line-item scope with bids.
The lender checks that the loan stays under the ARV cap. Purchase funds go at closing. Rehab funds come in draws against completed work. At the end, the contractor sells, or refinances into DSCR financing where rental coverage, not personal income, is the main test. The 1.00 coverage level is where select programs start, and a separate select-lender path takes coverage below 1.00 with leverage and terms adjusted.
Clearing 1.00 on the refinance does not mean the rental cash flows. DSCR compares rent to the full monthly obligation only. Repairs, vacancy, management, and capex sit outside it.
Where Do Contractors Get Tripped Up?
Most problems are liquidity and timeline problems, not income problems.
- Thin cash after closing. Hard money is interest-only, but carry still comes due while 1099 payments arrive unevenly. Hold reserves for the gap.
- Underestimated timelines. Permits and subs slip. A 6-18 month term does not.
- Personal use of proceeds. Mixing personal expenses into a business-purpose loan invites trouble.
- Skipping the exit plan. If the sale stalls, you need a refinance path. Think about it before closing, not after.
- Assuming no documents. The file is still document-heavy: entity, liquidity, scope, comps, contract.
One note on write-offs. Heavy deductions can lower the net income shown on your returns, which hurts on income-based loans. On an asset-based flip loan, that is mostly beside the point. It resurfaces only if you later pursue an income-based mortgage, so keep that in mind when planning your exit.
Key Terms Defined
- Asset-based lending: Underwriting that rests on the property and plan rather than the borrower’s income.
- ARV (after-repair value): The estimated market value once renovations are complete.
- Loan-to-cost: The loan amount as a share of purchase price plus rehab budget.
- Draw: A release of rehab funds after completed work is inspected.
- DSCR: Monthly rent divided by the full monthly housing obligation, including principal, interest, taxes, insurance, and any HOA dues.
Readiness Checklist
- Entity formed, with operating agreement and EIN
- Purchase contract and comp pack
- Line-item scope with contractor bids
- Bank statements showing cash to close and carry
- Completed-project summary, even if short
- Credit at or above 620, ideally 660 or higher
- A written exit: sale price target, or a plan to refinance into DSCR financing
For a fuller walk-through of exit options, see the complete DSCR loans guide.
Tax treatment varies; investors should keep clear records and consult a qualified tax professional or attorney about their own situation. This article is general information, not legal or tax advice.
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. Lendmire is a mortgage broker arranging financing through select lenders in its wholesale network across 41 markets, including Washington, D.C.
Frequently Asked Questions
Do I need traditional personal-income documentation or 1099s to get approved?
Usually not as the centerpiece. Asset-based lenders focus on the property, plan, and exit. Some may still ask for identity, liquidity, and entity documents, and a few ask for more, so requirements vary by lender.
Can I get a flip loan with a first project?
Yes, first-time investors qualify at the lower leverage tiers, typically 85% of project cost, capped at 75% of ARV. Experience changes leverage and terms more than basic eligibility. Subject to lender guidelines.
What credit score do I need?
A 620 minimum is typical, with additional conditions below 660. Credit is checked even though income is not the focus, and underwriting stays asset-based.
Do I need an LLC?
Many investor lenders prefer or require one, subject to program requirements. Loans to bona fide business entities also sit cleanly within business-purpose treatment.
What happens after the flip if I want to keep it as a rental?
Many investors refinance into long-term DSCR financing, which qualifies primarily on rental income covering the payment. Leverage, credit, reserves, and property eligibility still apply.
About Lendmire
Lendmire is a non-QM mortgage brokerage (NMLS# 2371349) arranging DSCR investor loans in 41 markets, including Washington, D.C., through wholesale and investor-lending channels. DSCR loans are evaluated by the lender on rental income rather than personal income, subject to lender guidelines — a fit for LLC-owned portfolios, self-employed investors, and operators scaling beyond conventional loan caps. Recognized as a Scotsman Guide Top Mortgage Workplace in 2025 and 2026.
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Informational only. Not a Loan Estimate, approval, or commitment to lend. Program availability and eligibility are subject to lender guidelines, credit approval, property review, and underwriting.
References
1. IRS – Independent contractor defined
2. Federal Register – CFPB ATR/QM final rule
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 · Can a DSCR Refinance Close Before Hard Money Maturity on a Long Rehab? · 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.