How Much Down Payment Does a 1099-Only Loan for Self-Employed Borrowers Need?

The Quick Read: It depends on the property and the program, but on a primary residence the down payment can be as low as 10%, because select lenders in Lendmire’s wholesale network go up to 90% LTV on a purchase or rate-term refinance. Stronger files earn the top of that range, and weaker credit, larger loans or thinner documentation push the down payment up. A rental purchase usually does not need a 1099-only loan at all, because a DSCR loan is reviewed for the property’s rent instead of your personal income.

• Primary residence purchase: up to 90% LTV, so the minimum down payment is the remainder, subject to lender guidelines.
• Owner-occupied cash-out: up to 80% LTV on a primary residence or second home.
• Investment-property cash-out: tops out around 75% LTV.
• Loan sizes run roughly $125,000 to $3,500,000, with reserves commonly around 6 months of the housing payment.
• Investment purchases on bank-statement documentation vary by lender, so the DSCR side is usually the better fit.

Most self-employed borrowers asking this question have a stack of 1099s, a tax return that shows very little profit, and a house they want to buy. The down payment answer is more flexible than the market assumes. It is also more dependent on what you are buying than on how you are paid.

What Is a 1099-Only Loan, Exactly?

A 1099-only loan is a non-QM mortgage for freelancers and contractors. Non-QM means the loan falls outside the standard rules for conventional mortgages, so each program sets its own documentation and leverage terms. It reads your 1099 income instead of the net figure on your tax return.

A 1099 is the form a client sends you when they pay you as a contractor rather than an employee. Lenders treat you as self-employed if you receive 1099s as a freelancer, own 25% or more of a business, or file a Schedule C. Most programs want about two years of steady self-employment in the same field.

Here is where the lanes split. A 1099-only loan reads 1099 totals. A bank statement loan reads 12 months of deposits, business or personal, and averages them. In the Lendmire network, the bank statement route is the one placed most often, and it handles messy income better. If you were paid through an LLC rather than personally, a 1099-only file can break. Deposits tell the story more cleanly.

So What Sets the Down Payment?

No law sets a down payment for these loans. The number comes from each program’s guidelines, and it is the remainder after the lender’s maximum LTV. LTV, or loan-to-value, is the loan balance divided by the property’s value. At 90% LTV, you put 10% down. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.

Across the wholesale network, these factors move the ceiling up or down:

Credit and loan size matter more than most borrowers expect. Two borrowers with identical income can get different maximum leverage purely because one has a stronger score and a mid-sized loan. Every file is underwritten individually, and exact eligibility depends on lender guidelines.

Market surveys describe 1099-only down payments as roughly 10% to 20% on a primary residence. Those are lenders’ figures, so treat them as context only. The network figure for a primary residence purchase or rate-term refinance is up to 90% LTV. Exact terms depend on the lender’s guidelines, property type, leverage, and a full review of the borrower’s file.

What Changes on a Second Home, Cash-Out or Rental?

Occupancy changes everything. A primary residence gets the best leverage. A cash-out on a primary residence or second home on bank-statement documentation tops out at 80% LTV with a fixed expense ratio, or 75% with an accountant-prepared ratio, depending on loan size and credit. Do not apply the 90% purchase figure to a cash-out. They are different ceilings. Every figure here varies by lender and program, and guidelines, property type, leverage, and credit profile all apply.

An investment-property cash-out tops out around 75% LTV. Investment purchases on bank-statement documentation vary by lender, so there is no single number to quote. For a rental purchase, investor-focused leverage guidance belongs to the DSCR side of the shop. Lendmire’s complete DSCR loans guide walks through those numbers.

If you would rather qualify from savings than income, an asset-depletion alternative runs up to about 80% LTV on a primary residence. It suits borrowers with large liquid balances and lumpy income. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.

Why Investors Usually Skip the 1099 Loan for Rentals

A 1099-only loan is built around your personal income. A rental is better underwritten on the property. A DSCR loan, short for debt service coverage ratio, divides the property’s monthly rent by its full monthly debt obligation. A coverage ratio of 1.00 means rent matches the payment. Select lenders in the network review files below that, with adjusted LTV and terms.

So a self-employed investor can usually leave 1099 income out of the rental purchase. The file qualifies primarily on property-level rental income covering the payment, subject to lender guidelines. Your down payment then follows leverage limits, credit and the coverage ratio. A bigger down payment shrinks the payment and lifts the coverage ratio.

This split also reflects how the loans are classified. A rental bought for investment is generally a business-purpose loan, which the CFPB’s Regulation Z § 1026.3 exempts from the consumer rules. The exemption turns on the loan’s purpose, not just the property type, so an owner-occupied small multifamily can be treated differently.

In practice: use the 1099 or bank-statement route for the home you live in, and DSCR for the rentals.

Where the Down Payment Money Comes From

Your down payment has to be sourced and seasoned. The lender wants to see it sitting in your own accounts, with a clean paper trail for any large deposit. Savings, sale proceeds and documented transfers are the common sources. Gift funds and business funds follow each program’s rules, so ask before you move money.

Business funds trip up self-employed buyers. Pulling the down payment from a business account can shrink the cash flow the lender is counting as income. Plan the withdrawal before you apply, not during underwriting.

Reserves are separate from the down payment. Commonly that is around 6 months of the housing payment, held after closing. Budget for down payment, closing costs and reserves together, because the total cash to close is what actually limits most buyers.

How Income Gets Counted

On the bank-statement route, qualifying income comes from the average of deposits over 12 months. Lenders apply their own expense factors to turn deposits into usable income. Those factors vary by lender, and no one should promise you a specific one. Under the consumer ability-to-repay rules, lenders must verify the income they rely on with reasonably reliable records, and the CFPB’s small entity compliance guide recognizes self-employment as employment a lender can consider.

So these loans are not undocumented. The file is reviewed on documented income under the applicable program, subject to lender guidelines. Expect 1099s or bank statements, ID, and often a year-to-date figure, since last year’s 1099 can lag your current earnings.

Which Product Fits You?

When is a 1099-only loan a bad fit? When your income runs through an entity, when your 1099 history is short, or when the property is a rental. A bank statement loan or DSCR loan usually handles those better.

Common Mistakes

• Assuming one down payment number applies everywhere. It varies by program, occupancy and credit.
• Using the purchase ceiling for a cash-out. Cash-out is capped lower.
• Moving money right before you apply. Unexplained deposits slow or sink files.
• Running a rental through personal income. DSCR is usually the cleaner route.
• Ignoring reserves. Cash to close includes more than the down payment.

Tax treatment can depend on how the funds are used and how the property is held; investors should keep clear records and speak with a qualified tax professional before relying on any deduction.

Reach out at 828-256-2183 or request a quote.

This article is general information, not legal or tax advice. Consult a qualified professional, such as an attorney or CPA, about your own situation.

About Lendmire

A DSCR-focused mortgage broker, Lendmire (NMLS# 2371349) places investor financing across 41 markets, 40 states plus Washington, D.C., with DSCR eligibility generally reviewed by the lender on property cash flow instead of traditional income documentation, subject to lender guidelines. Scotsman Guide named Lendmire a Top Mortgage Workplace in 2025 and 2026.

References

1. CFPB Regulation Z § 1026.3

2. CFPB Ability-to-Repay/Qualified Mortgage Small Entity Compliance Guide