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Physician mortgage as an independent contractor (1099)

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  • Physician mortgage as an independent contractor (1099)

    It seems like most lenders require 2 years of 1099 tax returns for physician mortgage.
    Is anyone aware of lenders that can accommodate 1 year of 1099 income?




  • #2
    Have you tried the recommended doctor mortgage providers for your state? Yes, I have heard of mortgage brokers who DON’T require 2 yrs of tax returns but I d/n know the names of them.
    Our passion is protecting clients and others from predatory and ignorant advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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    • #3
      Thanks for the suggestion. Yes, I reached out to ~15 of lenders on the WCI website explaining my situation (1 year of 1099). However, some of them still required 2 years of tax return, and I did not get any response from a lot of lenders.

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      • #4
        A local or regional bank might be more amenable.
        The underwriter has to document your income and be convinced that your income will continue. You have two years of tax returns, but you might be making the underwriting decision rather than letting the underwriter do their job. Tax returns for 2019, 2020 and something to support 9 months of 2021 might be convincing. Tax returns for 2019 might document the trend. W-2’s and 1099’s for 2019 prove the income change. Many mistake a full year of income that first year with a tax return. Documents tell a story. Ran into that with a student loan refi. Send in the 2019 return, sent in support for the change in income and the rate approved was based on the full year 2020 return. You have tax returns. Why refuse?

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        • #5
          Originally posted by at1821 View Post
          It seems like most lenders require 2 years of 1099 tax returns for physician mortgage.
          Is anyone aware of lenders that can accommodate 1 year of 1099 income?


          Having my second stint at 1099 I have never found anyone willing to do so, but havent looked too hard as its nearly impossible.

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          • #6
            Originally posted by at1821 View Post
            It seems like most lenders require 2 years of 1099 tax returns for physician mortgage.
            Is anyone aware of lenders that can accommodate 1 year of 1099 income?


            I’m 1099 and began practicing September 2019. In June 2020, we tried to get a mortgage with Fairway Independent Mortgage Corporation, but were declined for not having two years of tax returns. My contract is two years and pays the same salary every month. This did not matter to them.

            A few months later, we obtained a 5% down physician loan with SunTrust (now Truist) mortgages. We closed on our home December 2020 when I had less than two years of tax returns as 1099. 45 day closing window. Needed a lot of information but not too onerous. My interest rate is 3.275% (small discount for using a SunTrust checking account to pay the mortgage). We itemize our taxes so I think my effective mortgage rate is approximately 2.25% based on an online calculator that I found.

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            • #7
              Originally posted by endo4jc View Post

              I’m 1099 and began practicing September 2019. In June 2020, we tried to get a mortgage with Fairway Independent Mortgage Corporation, but were declined for not having two years of tax returns. My contract is two years and pays the same salary every month. This did not matter to them.

              A few months later, we obtained a 5% down physician loan with SunTrust (now Truist) mortgages. We closed on our home December 2020 when I had less than two years of tax returns as 1099. 45 day closing window. Needed a lot of information but not too onerous. My interest rate is 3.275% (small discount for using a SunTrust checking account to pay the mortgage). We itemize our taxes so I think my effective mortgage rate is approximately 2.25% based on an online calculator that I found.
              "Needed a lot of information but not too onerous." My guess is you submitted 2 years of tax returns, that checks a box for the underwriter. What else did you provide?
              Most recent pay stub showing YTD and a copy of contract? If you would elaborate a little it might help.

              Mortgage brokers will rarely if ever go outside of the box. Direct to a financial mortgage company is about the only way.

              Anecdotally, in the old days (prior to the no docs loan fiascos), even a W-2 required two years of employment at the same employer. The 1099 employment is becoming much more acceptable, and some are willing to work with it. That does not mean the box disappears, they verify the earnings with additional documentation.

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              • #8
                Originally posted by Tim View Post

                "Needed a lot of information but not too onerous." My guess is you submitted 2 years of tax returns, that checks a box for the underwriter. What else did you provide?
                Most recent pay stub showing YTD and a copy of contract? If you would elaborate a little it might help.

                Mortgage brokers will rarely if ever go outside of the box. Direct to a financial mortgage company is about the only way.

                Anecdotally, in the old days (prior to the no docs loan fiascos), even a W-2 required two years of employment at the same employer. The 1099 employment is becoming much more acceptable, and some are willing to work with it. That does not mean the box disappears, they verify the earnings with additional documentation.
                I did not have two year of tax returns as a 1099. My most recent return was 2020, which only included 4 months of 1099 work. My first full year as a 1099 was 2020, so my 2021 tax return obviously was not available. My physician loan did have to go through an exception underwriting department that required profit and loss statements, etc.

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                • #9
                  Originally posted by endo4jc View Post

                  I did not have two year of tax returns as a 1099. My most recent return was 2020, which only included 4 months of 1099 work. My first full year as a 1099 was 2020, so my 2021 tax return obviously was not available. My physician loan did have to go through an exception underwriting department that required profit and loss statements, etc.
                  Interesting. You had a set salary which should have been pretty simple and straightforward but surprised they did it still. I always wonder why they ask for assets etc...when they are usually gonna deny you for the income thing anyway.

                  Many have variable pay or lower than prior when starting a 1099 which doesnt help. '

                  Have thought of giving myself a w2.

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                  • #10
                    Originally posted by Zaphod View Post

                    Interesting. You had a set salary which should have been pretty simple and straightforward but surprised they did it still. I always wonder why they ask for assets etc...when they are usually gonna deny you for the income thing anyway.

                    Many have variable pay or lower than prior when starting a 1099 which doesnt help. '

                    Have thought of giving myself a w2.
                    I believe the underwriting approval was based on the ROT 1099 income that was documented.
                    4 months 2019, 12 months 2020, stub period and financials 2021. The contract fills in the gap for any missing months of documenting income.
                    The point he made was he needed to get to the “exception department”.
                    • physician loan with SunTrust (now Truist)
                    • I think Chase uses this approach for jumbo loans. They don’t have a physicians loan, just the loan size.
                    Those balance sheets have triggers that have minimums that cause a denial, not approval.

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                    • #11
                      Originally posted by Zaphod View Post

                      Interesting. You had a set salary which should have been pretty simple and straightforward but surprised they did it still. I always wonder why they ask for assets etc...when they are usually gonna deny you for the income thing anyway.

                      Many have variable pay or lower than prior when starting a 1099 which doesnt help. '

                      Have thought of giving myself a w2.
                      I had a similar experience when refinancing my student loans. In January 2020, I applied to refinance with SoFi but was denied due to not having two years of tax returns as 1099. In February 2020, I refinanced with Earnest without difficulty.

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                      • #12
                        Originally posted by endo4jc View Post

                        I had a similar experience when refinancing my student loans. In January 2020, I applied to refinance with SoFi but was denied due to not having two years of tax returns as 1099. In February 2020, I refinanced with Earnest without difficulty.
                        I love earnest and was looking to refi a different loan with them but they dont loan in my new state, so sad

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                        • #13
                          TD Bank does not require 2 years for 1099. PM me if you want my loan officers information.

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