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Getting a mortgage for an investment property as a freelancer/1099?

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Todor_Builder
Joined:
01.06.2022
Posts: 2360
Topic Starter
10.01.2025 12:02
I've been self-employed for about three years now and I'm really looking to pull the trigger on my first investment property. The problem is that every lender I talk to seems obsessed with W-2 paystubs and tax returns that show a high taxable income, even though my gross revenue is solid. I have a good down payment saved up, but I'm worried about qualifying for a decent interest rate without that traditional employment history. Has anyone here successfully navigated this as a business owner or independent contractor? I'm curious if I should look into DSCR loans or if I'm better off finding a smaller local bank that might be more flexible with manual underwriting.
16 replies in this topic
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radek_sofia
Joined:
10.05.2021
Posts: 2218
12.01.2025 06:29
I was in your exact shoes two years ago. The big banks will almost always turn you away because their underwriting software isn't built for 1099 income. You really need to look at a mortgage broker who specializes in non-QM loans.
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Ekspert_11
Joined:
21.09.2021
Posts: 626
15.02.2025 22:16
In reply to a previous post
To add to that, definitely look into DSCR loans. They don't even look at your personal income; they just care if the property's projected rent covers the mortgage payment.
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Fabi_W
Joined:
28.03.2023
Posts: 892
26.02.2025 06:28
In reply to a previous post
DSCR is great but be warned: the interest rates are usually 1-2% higher than conventional loans. It eats into your cash flow.
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jacek_bg
Joined:
06.08.2023
Posts: 1395
28.02.2025 22:44
Have you tried a local credit union? They often have more leeway with manual underwriting since they hold the loans on their own books instead of selling them to Fannie Mae.
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Oli_L
Joined:
15.09.2023
Posts: 179
03.03.2025 13:30
In reply to a previous post
Seconding the local credit union advice. I got my investment property financed through a small regional bank after three big lenders rejected me.
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Stasi_B
Joined:
29.09.2021
Posts: 404
10.04.2025 00:31
The issue is that for tax purposes, we freelancers write off everything possible, which makes our 'net income' look tiny on paper. Lenders don't care about your gross revenue, unfortunately.
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anonimen_bg
Joined:
21.03.2020
Posts: 1891
15.04.2025 15:19
In reply to a previous post
Exactly! My CPA always tells me to show more profit, but that means paying more taxes. It's a catch-22.
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anonimen_bg
Joined:
03.09.2022
Posts: 1080
22.04.2025 02:37
Look into 'Bank Statement Loans'. Some lenders will just look at 12-24 months of your business bank statements to verify your income rather than your tax returns.
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gost_nedelq
Joined:
13.01.2025
Posts: 874
09.08.2025 05:05
In reply to a previous post
Be prepared for a higher down payment if you go the non-QM route. Most lenders want at least 20-25% down for investment properties if you aren't using standard W-2 income.
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Denis_P
Joined:
15.04.2022
Posts: 1139
09.08.2025 18:16
I’m a freelancer too and I just gave up on residential loans. I started using commercial lending for my rentals. It’s a different ball game but much friendlier to business owners.
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Aleks_K
Joined:
18.03.2020
Posts: 2382
18.08.2025 20:53
In reply to a previous post
Is it worth the extra paperwork for a commercial loan if it's just a single condo? Seems like overkill.
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Iggy_R
Joined:
13.05.2021
Posts: 595
18.11.2025 05:15
Honestly, find a good mortgage broker. They have access to dozens of lenders and can shop your file around to people who actually understand 1099 income.
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Selekcioner
Joined:
06.03.2025
Posts: 1443
01.12.2025 15:09
Don't get discouraged. It took me four months and six different lenders before I found one that 'got' my business structure.
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NeZnamNoPisha
Joined:
12.10.2021
Posts: 670
05.12.2025 05:42
Make sure your tax returns are squeaky clean. Even if your net income is low, if it's consistent, some lenders will work with you.
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Bobi_J
Joined:
24.12.2022
Posts: 2071
24.01.2026 10:22
In reply to a previous post
I've heard of people 'adding back' depreciation to their income to help qualify. Have you talked to your lender about that?
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monika_p
Joined:
06.05.2021
Posts: 292
11.04.2026 19:30
Good luck with the search! It's a pain, but once you find that one lender who works with entrepreneurs, you'll be set for your next five properties.

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