1099 Mortgage Texas: How Independent Contractors Qualify Without Tax Returns in 2026

Texas has more than 1.6 million independent contractors and 1099 workers — real estate agents across DFW, Austin, Houston, and San Antonio; owner-operator truckers driving I-10 and I-35; oil & gas field services contractors in the Permian and Eagle Ford; software contractors in the Austin tech corridor; rideshare and delivery drivers; healthcare locums; insurance agents; consultants (source: U.S. Census Bureau, American Community Survey 2024). Most of those Texans qualify for substantially less mortgage than their actual 1099 income supports, because conventional underwriting calculates income from tax returns — not from what the 1099 forms actually show. A 1099-only mortgage closes that gap by underwriting to your real 1099 income, applying a small standard expense factor, and skipping tax returns entirely.

The rule: in Texas, a 1099-only mortgage qualifies you on roughly 90% of your gross 1099 income over the last 12 or 24 months. Expect rates 0.50-1.50% higher than today’s wholesale conventional rate (so roughly 6.25-7.25% in 2026 vs ~5.62% wholesale conventional), 10-20% down depending on FICO and loan size, and access up to $3-4 million in Texas on a primary residence. The advantage over bank statement loans: the documentation burden is dramatically lighter (your 1099 forms instead of 24 months of bank statements with an expense factor applied), and the qualifying income calculation is more predictable. Texas’s lack of a state income tax narrows the gap between tax-return income and 1099 income vs California — but the gap is still meaningful, and the program still unlocks 1.5-2.5x more qualifying income for the typical Texas 1099 contractor.

What follows is how 1099-only mortgages actually work in Texas, who they fit best, how they compare to bank statement loans, Texas-specific considerations (no state income tax, high property tax, Texas Section 50(a)(6) cash-out rules), and how to get a quote that matches what a wholesale broker can actually fund.

Quick answer: A 1099-only mortgage uses your 1099 forms (typically 12 or 24 months) to calculate qualifying income, applying roughly a 10% expense factor — so 90% of your gross 1099 totals count as income. Rates run 0.50-1.50% above conventional, minimum FICO typically 660 (700+ for loans over $2M), max LTV 80-85% on primary residence, max loan size $3-4M in Texas. Best for: pure 1099 contractors with stable income from 1-3 sources — Texas real estate agents, owner-operator truckers, oil & gas field contractors, software contractors, gig drivers, consultants, and healthcare locums.

On This Page

• What Is a 1099-Only Mortgage?
• 1099 Mortgage vs Bank Statement Loan: Which One Fits?
• How Lenders Actually Calculate Your 1099 Income
• Texas-Specific Considerations
• Documentation You Actually Need
• Typical Rates, LTV, and Costs vs Conventional
• Who Qualifies (and Who Doesn’t)
• Texas 1099 Mortgage FAQs
• How to Get a Real Quote Instead of an Estimate

What Is a 1099-Only Mortgage?

A 1099-only mortgage is a non-QM (non-qualified mortgage) program that calculates your qualifying income from your 1099 tax forms — specifically Form 1099-NEC (non-employee compensation, for most contractors) and Form 1099-MISC (for some royalty and rental income). The lender averages your 1099 totals over the last 12 or 24 months, applies a standard expense factor of about 10%, and uses the resulting figure as your qualifying income for DTI calculations. Everything else — credit score, reserves, down payment, DTI ratios — works the same way as a conventional loan.

The reason this product exists: self-employed Texas borrowers actively manage their tax returns to minimize taxable income. The IRS rewards independent contractors for legitimate business deductions (home office, vehicle mileage, equipment, professional development, retirement contributions). Every dollar of legal deduction reduces your federal tax bill — the only income tax Texans pay. But every dollar also reduces the income a conventional underwriter sees on your 1040. A DFW real estate agent who earned $310,000 in 1099 commissions but showed $130,000 in taxable income after legitimate deductions qualifies for a $360K mortgage on a conventional loan — not the $825K her actual income could support. The 1099-only program closes that gap.

The mortgage industry calls this a “non-QM” loan because it doesn’t meet the “qualified mortgage” standards set by the CFPB — specifically the requirement that income be documented via tax returns or W-2s. Non-QM doesn’t mean “subprime.” It means “underwritten outside the standard QM box,” usually because the income documentation is structured differently. Most non-QM borrowers have stronger overall financial profiles than the average QM borrower.

1099-only mortgages are offered by the same subset of non-QM wholesale lenders that handle bank statement loans in Texas — not by Fannie Mae, Freddie Mac, FHA, or VA. The wholesale market for these products has matured significantly since 2020, and today there are 15-20+ established non-QM wholesale lenders competing for Texas 1099 files. That competition is why broker access to multiple lenders matters more on this product than almost any other.

1099 Mortgage vs Bank Statement Loan: Which One Fits?

Both are non-QM products for self-employed Texas borrowers. They overlap in audience but solve slightly different documentation problems.

1099-only mortgage is better when:

• Your income comes primarily from 1099 sources. Most or all of your reported income arrived as 1099-NEC or 1099-MISC forms.
• You have 1-3 income sources rather than many. Texas real estate agents (1099 from brokerage), owner-operator truckers (1099 from freight broker or shipper), and software contractors (1099 from 1-2 clients) are textbook cases.
• Your bank statement deposits are messy or commingled. If you transfer money between personal and business accounts frequently, bank statement underwriting gets complicated. 1099s are cleaner.
• You want the lighter documentation burden — sending 1-2 years of 1099 forms instead of 24 months of bank statements covering every page.
• Your business has low overhead (consulting, real estate sales, content creation) and the lender’s default 10% expense factor on 1099s captures your actual cost structure better than the 50% default on business bank statement deposits.

Bank statement loan is better when:

• You have multiple income sources that don’t all generate 1099s (cash tips, foreign clients without 1099 reporting, irregular work).
• You’re an oil & gas operator, restaurant owner, or other business owner with substantial operational cash flow that doesn’t show on your personal 1099s.
• You’ve had a recent income spike that 12 months of personal bank statements would capture but that your 2024 1099s wouldn’t reflect yet.
• You want flexibility to count business AND personal account deposits at different expense factors to maximize qualifying income.

A Texas wholesale broker should run both calculations for any borrower whose situation could fit either program. The numbers can swing materially depending on which path you take — 10-25% difference in qualifying income isn’t unusual.

How Lenders Actually Calculate Your 1099 Income

The 1099 income calculation is more straightforward than the bank statement formula. Two pieces.

Average your 1099 gross income. The lender pulls your 1099 forms for the last 12 or 24 months (depending on which program variant you file), sums the gross amounts across all 1099-NEC and 1099-MISC forms, and divides by the number of months. That produces your average monthly 1099 income.

Apply the expense factor. Most Texas 1099 mortgage programs apply a default 10% expense factor — meaning 90% of your gross 1099 income counts as qualifying income. That’s much lower than the 50% default on business bank statement deposits, because 1099s already represent what was paid to you after the payer’s expenses, not gross business revenue going through an operating account.

Some lenders let you negotiate the expense factor:

• Lower expense factors (5-7%) for industries with documented minimal expenses — pure consulting, salaried-style contracting, content licensing royalties.
• Higher expense factors (15-25%) for industries with documented significant expenses — Texas real estate agents (marketing, MLS, split commissions), independent insurance agents, oil & gas field services contractors who buy materials, owner-operator truckers (fuel, maintenance, insurance, depreciation on the rig).
• CPA letter override — a CPA-prepared profit and loss statement or letter attesting to your actual expense ratio can move the assumed factor on your file. This is the single highest-leverage document — a CPA letter that drops your expense factor from 10% to 5% increases your qualifying income by roughly 5%, which on a typical Texas file can translate to $25,000-$40,000 of additional purchasing power.

The 43-50% DTI ceiling. Once your qualifying income is calculated, standard non-QM 1099 mortgage DTI cap is 43% back-end. Competitive lenders allow up to 50% DTI when LTV is above 80%, and up to 55% when LTV is at or below 79.99%. Same flex pattern as bank statement programs.

Worked Texas example. Austin software contractor with $220,000 in 1099 income for 2025 (single 1099-NEC from her contracting agency) and $205,000 for 2024 (two 1099s, similar pattern). Average annual 1099 income across 24 months: $212,500. After the standard 10% expense factor: $191,250 of qualifying income, or $15,938/month. At conventional underwriting on her 2024 Schedule C showing $108,000 taxable after deductions: conventional qualifying income = $108,000/year, or $9,000/month. Same contractor. Same actual income. 1099 mortgage qualifies her for roughly 77% more house.

Texas-Specific Considerations

Texas is the second-largest 1099 mortgage market in the country after California. Several state-specific factors make 1099-only programs either more powerful or more complex here than elsewhere.

Texas real estate agents are the single largest user group. Texas has over 180,000 licensed real estate agents and brokers (TREC data), and the overwhelming majority are 1099 contractors of their sponsoring brokerage. Their income is 100% commission-based, lumpy by transaction, and historically difficult to qualify on conventional tax-return underwriting because of the high deduction load (marketing, MLS fees, vehicle mileage, professional development, split commissions). 1099-only mortgages were essentially designed for this audience. Top Texas agents in DFW, Austin, Houston, and San Antonio routinely qualify for $1-2.5M Texas purchases through 1099 programs that their tax returns wouldn’t support.

Owner-operator truckers are a major Texas 1099 audience. Texas is the largest interstate trucking market in the country — the freight crossroads connecting California, Mexico, and the eastern half of the U.S. Owner-operators with their own freight authority typically receive 1099s from freight brokers, shippers, or load boards. After fuel, equipment depreciation, insurance, and maintenance deductions, their Schedule C taxable income often shows a fraction of gross 1099 receipts. 1099 mortgage programs that aggregate gross 1099 income before deductions can unlock substantial qualifying income for this audience.

Oil & gas field services contractors in the Permian, Eagle Ford, and Anadarko Basin. Texas’s oil patch generates substantial 1099 income for field services contractors, frac crews, water haulers, well services techs, mineral rights brokers, and lease operators. Many of these contractors earn $150K-$400K+ in 1099 income but show modest taxable income after equipment depreciation and per diem deductions. 1099 mortgages are well-suited to this profile.

Texas gig economy — no Prop 22 complications. Unlike California (where Proposition 22 carved out a specific independent contractor classification for rideshare and delivery platforms after years of litigation), Texas has consistently treated gig platform workers (Uber, Lyft, DoorDash, Instacart, Amazon Flex) as 1099 contractors. Texas gig drivers receive clean 1099-NECs from each platform they drive for and stack them as documentation for qualifying. Many full-time Texas gig drivers earn $50K-$100K+ across multiple platforms.

Hispanic 1099 entrepreneurs across Houston, San Antonio, the Rio Grande Valley, and El Paso. Texas’s Hispanic small business population is substantial, and a significant share are 1099 contractors (construction trades, transportation, professional services, home services). For first-generation immigrant entrepreneurs without Social Security Numbers, 1099 mortgage programs that accept ITIN borrowers are often the only path to Texas homeownership. Conventional loans typically don’t.

Texas Section 50(a)(6) restrictions on cash-out refinance. Texas constitutional Article XVI Section 50 imposes specific restrictions on home equity lending against a Texas homestead (primary residence): 12% maximum cash-out LTV, 12-day waiting period before closing, specific disclosure requirements, and a one-cash-out-per-12-months rule. 1099 cash-out refinance programs in Texas respect these restrictions on primary residences. Non-homestead Texas properties (investment, second home) don’t have these restrictions.

No state income tax narrows but doesn’t close the gap. Texas has no state income tax, which means tax-return income for Texas 1099 contractors shows higher relative to gross than for California 1099 contractors. On paper this should narrow the conventional-vs-1099 qualification gap. In practice, Texas 1099 borrowers still aggressively reduce federal taxable income through home office, mileage, depreciation, retirement contributions, and business expenses. The gap shrinks 5-10% relative to California — not 50%. 1099 programs still unlock 1.5-2.5x more qualifying income for the typical Texas contractor.

Documentation You Actually Need

Standard Texas 1099 mortgage documentation is dramatically lighter than bank statement underwriting:

• 1099 forms for the last 12 or 24 months. All 1099-NEC and 1099-MISC forms issued to you (or to your loan-out corporation, if applicable) for the lookback period. If you have multiple sources, all of them.
• Year-to-date income documentation. Either a YTD letter from your largest 1099 payer (brokerage, freight broker, contracting agency, platform) confirming income earned in the current year, or a CPA-prepared YTD profit and loss statement, or YTD 1099 summary from your accounting platform.
• Business license or evidence of self-employment for the lookback period — Texas Sales and Use Tax Permit, Texas Comptroller franchise tax registration, real estate license (TREC), DOT/MC number for owner-operator truckers, professional license, oil and gas operator registration, or 2 years of consistent 1099 history.
• Personal credit report — pulled by the lender. 660 FICO minimum on most programs, 700+ for loans above $2M, 720+ for the best rate tier.
• Two months of liquid asset statements — checking, savings, brokerage, money market, retirement (60% counted for reserves).
• VOR (Verification of Rent) or mortgage history — 12 months minimum, no 30-day lates on the housing payment.
• State ID + SSN or ITIN. 1099 mortgage programs accept ITIN borrowers; conventional loans typically do not.
• Optional but high-leverage: CPA letter attesting to the actual expense ratio in your business.

Documentation NOT required: federal tax returns, W-2s, K-1s, 4506-C transcripts, formal business financial statements, audited books, or 24 months of bank statements.

Typical Rates, LTV, and Costs vs Conventional

1099 mortgages price 0.50-1.50% above today’s wholesale conventional rate. As of June 2026, with wholesale conventional running ~5.62%, expect 1099-only programs in the 6.25-7.25% range on owner-occupied primary residences depending on FICO, LTV, loan size, and lender.

Loans above $2M: 700+ FICO floor common. Loans above $3M: 720+ FICO floor, 70% max LTV typical. Loans up to $4M: 720+ FICO, 65% max LTV.

Reserves requirements: 6 months of PITI in liquid assets for loans up to $1.5M, 12 months for loans above $1.5M, 18 months for loans above $3M. Retirement accounts count at 60% toward reserves.

The rate premium math. A 0.75% rate premium on a $600K Texas 1099 mortgage (vs a hypothetical conventional that wouldn’t actually approve you on your tax returns) costs roughly $250/month extra in P&I and $90,000 extra over a full 30-year term. The implicit benefit: qualifying for the house at all when your tax returns wouldn’t have qualified you.

Who Qualifies (and Who Doesn’t)

Best candidates:

• Texas real estate agents and brokers with 2+ years of consistent commission income via 1099 from their brokerage.
• Owner-operator truckers with their own freight authority and 2+ years of 1099 income from brokers or shippers.
• Oil & gas field services contractors in the Permian, Eagle Ford, and Anadarko Basin with stable 1099 history.
• Software contractors, designers, consultants, and freelancers earning $100K+ annually with 1099s from 1-3 stable clients.
• Rideshare and gig drivers (Uber, Lyft, DoorDash, Instacart, Amazon Flex) with consistent multi-platform 1099 history showing $50K+ aggregate annual income.
• Healthcare locums, traveling nurses, and per-diem medical professionals with 1099s from staffing agencies.
• Independent insurance agents, mortgage loan originators, and financial advisors with 1099 commission income.
• ITIN borrowers across Hispanic small business populations in Houston, San Antonio, the Rio Grande Valley, and El Paso.

Won’t qualify or shouldn’t use this product:

• W-2 employees with conventional qualifying income at standard underwriting. The rate premium isn’t worth it.
• Self-employed less than 12 months — programs require minimum 12 months of 1099 history.
• Pure cash-business owners whose income doesn’t flow through 1099 reporting. Bank statement loans are the better path here.
• FICO below 660 — consider FHA non-QM hybrid programs or focus on credit rehab first.
• Inconsistent 1099 history with major gaps. A gap of 3+ months with no 1099 activity during the lookback period typically disqualifies.
• S-Corp owners who pay themselves a small W-2 salary plus large distributions — their 1099s often don’t reflect total compensation.
• Borrowers needing the absolute lowest rate — conventional always wins on pricing when you qualify.

Texas 1099 Mortgage FAQs

How much can I borrow on a Texas 1099 mortgage?

Most Texas programs cap at $3-4 million on a primary residence. A handful of specialty lenders go to $5-7M for ultra-luxury Highland Park, Preston Hollow (DFW), River Oaks (Houston), Tarrytown and Westlake (Austin), or Alamo Heights (San Antonio) purchases. Investment property and second home limits are lower — typically $2.5M and $2M respectively.

What credit score do I need for a 1099 mortgage in Texas?

660 minimum for most Texas programs (slightly tighter than the 640 floor on bank statement loans), 680+ to unlock 85% LTV, 700+ for loans above $2 million, 720+ for the best rate tier. A 720+ score combined with 24 months of consistent 1099 history from 1-3 sources is the sweet spot.

Can I use a 1099 mortgage for a cash-out refinance in Texas?

Yes, but Texas Section 50(a)(6) imposes constitutional restrictions on cash-out refis against your homestead: 12% maximum cash-out LTV, 12-day cooling-off period before closing, and only one cash-out per 12 months. Non-homestead Texas properties (investment, second home) don’t have these restrictions. Non-homestead 1099 cash-out pricing runs 0.25-0.50% higher than purchase pricing at the same LTV.

How many months of 1099s do I need?

12 or 24, depending on the program variant. 12 months works best if your most recent year materially outperformed earlier years. 24 months provides more stability evidence and unlocks better pricing at some lenders. Most Texas programs prefer 24 months because it covers two full tax years of 1099 reporting.

Will the lender look at my tax returns?

No. 1099-only mortgages do not require tax returns, W-2s, K-1s, or 4506-C transcripts. The lender qualifies your income solely from your 1099 forms, the expense factor adjustment, and optionally a CPA letter.

Can I combine 1099 income with W-2 income?

Yes, on most Texas programs. If you have a part-time W-2 job in addition to your 1099 work, the lender can use both: full 100% of W-2 income from your last two years plus 90% of your 1099 income (after the 10% expense factor). Common for Texas consultants with part-time university adjunct positions, healthcare locums with small W-2 hospital affiliations, or rideshare drivers with part-time W-2 jobs.

How to Get a Real Quote Instead of an Estimate

National calculators and lender websites quote 1099 mortgage rates from a single lender’s pricing sheet. The non-QM wholesale market doesn’t work that way. With 15-20+ active non-QM wholesale lenders in Texas, each with their own pricing engines, expense-factor flexibility, FICO grids, and LTV ceilings, the same Texas borrower file can produce wildly different qualifying numbers depending on which lender prices it.

A wholesale broker submits your file to all of them at once. Within 24-48 hours, the comparison sheet comes back with what each lender approved you for, at what rate, at what LTV, with which expense factor applied. The winning quote is almost always meaningfully better than the first lender that quoted you — particularly on 1099 mortgages, where industry-specific expense factor handling can swing qualifying income by 10-15%.

That’s what we do at OnPoint Mortgage Pro. Texas-licensed (alongside California, Colorado, Florida, Idaho, Maryland, New Hampshire, South Carolina, and Virginia), headquartered in Irvine, serving Texas buyers and homeowners across Houston, DFW, Austin, San Antonio, El Paso, the Rio Grande Valley, the Permian Basin, and every market in between. We don’t sell one bank’s loan. We shop your file across the 20+ wholesale lenders pricing Texas non-QM today and bring you the comparison sheet.

Want to know what you actually qualify for? Learn more about our non-QM and 1099 mortgage programs, or call us directly at (877) 870-0007. Bring your last 12 months of 1099 forms and we’ll run a preliminary qualifying calculation on the call.

Most Texas 1099 contractors qualify for 50-100% more house on 1099 mortgage underwriting than on conventional. The gap is the cost of using your tax returns instead of your actual 1099 income. Call us at (877) 870-0007 and we’ll show you the math on your actual numbers.

See Also: Related Broker Resources

• Bank Statement Loans in Texas — sibling Non-QM product. Uses 12-24 months of bank statements instead of 1099 forms. Better for borrowers with mixed income sources or cash-heavy businesses.
• 1099 Mortgage California — sibling state for the same product. Same expense-factor math, different state-specific considerations.
• DSCR Loans in California — sibling Non-QM product for real estate investors qualifying the property by rental cash flow.
• OnPoint Non-QM Loan Programs — the money page covering bank statement, 1099, DSCR, asset-depletion, and other non-QM products.
• How Much House Can You Afford in Texas? — conventional version of the affordability math.
• Texas Mortgage Programs — full Texas product lineup.

Now available in Texas: DSCR loans for real-estate investors. Coming soon: 1099 mortgages in Virginia and Colorado.

Victor Santos, NMLS #888844, is a Senior Loan Officer and licensed mortgage broker serving Texas 1099 contractors and self-employed buyers. OnPoint Mortgage Pro (NMLS #2134550) is licensed in California, Colorado, Florida, Idaho, Maryland, New Hampshire, South Carolina, Texas, and Virginia. The 1099 mortgage examples on this page use representative Texas non-QM wholesale market assumptions as of June 2026 for illustration; your actual qualifying amount and rate depend on your specific 1099 history, FICO, LTV, loan size, property type, expense factor, lender overlays, and current pricing. Rates change daily. See today’s rates or call (877) 870-0007 for a current 1099 mortgage quote. Equal Housing Lender.