Exploring 1099 Mortgage Options in Michigan for Independent Contractors

Understanding the Challenges for Independent Contractors in Michigan

Independent contractors across Michigan, from Detroit to Grand Rapids, often face barriers when trying to qualify for a traditional home loan. Whether you’re a self-employed carpenter in Traverse City, a freelance graphic designer in Ann Arbor, or a gig economy worker in Kalamazoo, relying solely on tax returns or W-2s doesn’t paint the full picture of your income. These rigid qualification standards by conventional lenders can hinder capable buyers from entering the housing market.

That’s where Non QM Loan programs come into play. These alternatives are designed with Michigan’s growing 1099 workforce in mind, offering mortgage solutions that consider real earnings and business deposits rather than just tax filings. The growth in Michigan’s entrepreneurial economy makes this lending strategy more relevant than ever.

What Are 1099 Mortgage Loans?

A 1099 mortgage loan is an alternative financing solution tailored for self-employed professionals who receive IRS Form 1099 as proof of income rather than traditional W-2 wages. Instead of scrutinizing tax returns—often reduced by deductions—these programs look at gross deposits or the income reported on 1099 forms to determine your ability to repay.

This is especially valuable in Michigan cities like Marquette or Alpena, where many workers perform seasonal contract jobs in tourism, fishing, or construction. Similarly, gig workers driving for Uber or delivering groceries in urban centers like Lansing or Sterling Heights often have fluctuating income that these loans can better accommodate.

For individuals who own single-member LLCs or operate as sole proprietors—common across Michigan’s trades and freelance sectors—1099 loans allow them to leverage business income without relying on often-confusing tax summaries. This distinction is crucial for ensuring fair access to credit.

Who Qualifies for 1099 Mortgage Programs?

NQM Funding’s alternative documentation options make it easier for independent contractors to qualify. These programs don’t require tax returns or W-2s. Instead, you can verify income through:

• One or two years of 1099s

• A P&L statement (profit and loss), CPA-prepared or self-prepared

• Bank statements showing income deposits

Eligibility is strengthened if the borrower has a credit score above 660, at least two years in the same industry, and adequate reserves. For example, a freelance video editor based in Royal Oak or a solar panel installer from Midland could qualify more quickly using business bank statements and a P&L report. These tools reflect actual earnings without requiring borrowers to navigate the limitations of adjusted gross income.

Loan officers should pay attention to whether a borrower’s income is seasonal or project-based, which is common in areas like Bay Harbor or the Upper Peninsula. Income averaging techniques can provide a path to approval even for borrowers whose income is uneven throughout the year.

Benefits of 1099 Loans for Michigan’s Independent Workers

Michigan’s housing market is competitive in cities like Royal Oak and Holland. 1099 mortgage loans offer benefits that make self-employed buyers more competitive:

• Flexible Income Verification: Options like P&L statements and bank statement loans let borrowers present real income instead of taxable income.

• Higher LTV Ratios: Up to 90% loan-to-value in many cases, helping buyers avoid large down payments.

• No Mortgage Insurance Requirements: Saving borrowers in high-cost Michigan areas thousands over time.

• Quick Turnaround with Non QM Lender Expertise: Faster qualification helps buyers stay competitive, especially in bidding wars in places like Ann Arbor and East Lansing.

In communities like Okemos or Farmington Hills where homes frequently sell above asking price, being prequalified through a 1099 mortgage program makes a real difference.

Self-employed borrowers who take advantage of 1099 loan programs also benefit from not having to wait for year-end documentation. This is especially useful for those buying homes during spring or summer markets when competition is at its peak.

Michigan’s Independent Contractor Economy

According to state labor statistics, nearly 15% of Michigan’s workforce identifies as self-employed. Major sectors include:

• Detroit: Real estate agents, app developers, and rideshare drivers

• Grand Rapids: General contractors, independent designers, and consultants

• Traverse City: Seasonal workers in tourism, outdoor recreation, and hospitality

• Flint and Saginaw: Electricians, delivery drivers, and cleaning services

Smaller cities like Bay City, Monroe, and Jackson are also experiencing growth in 1099 work, particularly among skilled trades and service workers. As the labor market becomes more decentralized, lending needs to follow suit—and these loans provide the flexibility to do so.

Southeast Michigan has also seen a rise in short-term contract work across the automotive design and engineering fields. These professionals often have the income to support homeownership but struggle to prove it through traditional underwriting models. 1099 mortgages change that dynamic.

NQM Funding Programs: Flexibility Built In

Two of the most 1099-friendly mortgage options at NQM Funding are the Flex Supreme and Flex Select programs:

• Flex Supreme: Best suited for high-credit borrowers. Requires at least two tradelines for 24 months or three tradelines for 12 months. Allows LTVs up to 90%, interest-only options, and loan amounts up to $3 million.

• Flex Select: Designed for borrowers needing more lenient credit or documentation guidelines. Great for contractors who recently went self-employed or whose credit history includes some blemishes. Allows for P&L only income documentation, as well as bank statement options.

Loan officers working in communities like St. Clair Shores or Portage have found success helping borrowers use these products to purchase or refinance investment properties, starter homes, or even vacation cabins.

How 1099 Borrowers Use Alternative Documentation to Qualify

Michigan freelancers and contractors have multiple paths to proving income:

• 1099 Forms: For tech freelancers in Ann Arbor, showing two years of 1099s from various clients can demonstrate a consistent income stream.

• Bank Statements: For Grand Rapids contractors, 12 or 24 months of deposits into a business checking account show income trends more accurately than tax returns.

• P&L Only: Especially useful for real estate professionals in Metro Detroit, a well-prepared P&L can help qualify for larger loan amounts without the need for additional paperwork.

Some applicants in cities like Auburn Hills or Rochester Hills use a combination of 1099 and P&L income to maximize their qualifying potential.

Brokers should also note that using business bank statements requires matching them to the same income sources reflected on a P&L. Accuracy and consistency in documentation are key to streamlining the underwriting process.

Why 1099 Borrowers Are Active in Michigan’s Real Estate Market

• Ann Arbor & East Lansing: Young professionals and digital freelancers often rent but are now seeking ownership as rates stabilize.

• Detroit Suburbs: Independent tradespeople and first-time buyers are drawn to Ferndale, Warren, and Livonia.

• Western Michigan: In Grand Rapids and Muskegon, lower cost of living and robust renovation activity attract 1099 homebuyers.

• Vacation Zones: Traverse City and Petoskey see strong second-home purchases among seasonal workers using 1099 loans.

Cities like Howell and Brighton are also popular for 1099 borrowers seeking a balance between affordability and access to metro jobs.

Buyers with 1099 income are often eager to close quickly and may be shopping during peak seasons. Flexible programs from Non QM lenders give them the edge needed to make strong, fast offers in tight markets.

Packaging 1099 Loans for Approval: Best Practices for Brokers

In Michigan’s fast-moving market, brokers who know how to properly package a 1099 loan will rise above their peers. Key strategies include:

• Provide a complete narrative letter explaining the business structure.

• Use detailed P&Ls to explain large deposit spikes or seasonal drops.

• Clarify any multiple revenue streams—common in cities like Kalamazoo or Flint.

• Submit files early for manual underwriting if the borrower is just outside guideline ranges.

Refinancing with 1099 Mortgage Options in Michigan

Refinancing is a smart way for 1099 borrowers in Michigan to lower their rates, extract equity, or consolidate debt. Borrowers in Dearborn, Midland, or Ypsilanti often use P&L-only or 1099 documentation to refinance investment properties or cash-out on properties that have appreciated.

With home values up across most of the state, and inflation impacting household budgets, this is an ideal time to connect with borrowers about refinancing opportunities through a Non QM Lender.

Seasonal Income Borrowers and Michigan’s Market

Workers in Northern Michigan cities like Alpena or Charlevoix often have high-earning seasons followed by quiet winters. 1099 mortgage programs can average seasonal income using 12-month or 24-month documentation periods, which gives seasonal business owners the ability to qualify without penalty.

Loan officers serving coastal towns or tourist-heavy markets should position these options as ideal fits for seasonal workforce borrowers, including marina managers, tour operators, and event planners.

Additional Loan Options to Consider

While 1099 documentation is often enough, some Michigan borrowers might benefit from other Non QM Loan options:

• Bank Statement Loans: Great for restaurant owners in Flint or therapists in Kalamazoo.

• Investor DSCR Loans: Ideal for landlords and house-flippers in Wayne or Kent counties.

• Foreign National / ITIN Loans: For contractors working with ITINs in communities like Hamtramck and Dearborn.

These options give brokers flexibility when one doc type doesn’t fully reflect a borrower’s true qualifying potential.

Why NQM Funding Is the Preferred Partner for Michigan Brokers

NQM Funding is a dedicated Non QM Lender that understands the complexity of 1099 borrowers. Brokers across Michigan rely on personalized support and smart product matching that includes:

• Manual underwriting flexibility

• Support for P&L-only income

• High LTV limits, up to 90%

• Fast turn times to stay competitive in tight markets

• Personalized guidance for each borrower’s income profile

Whether your client is buying a first home in Battle Creek or refinancing a lakefront cottage in Gaylord, NQM Funding has the products to get it done.

Get Started Today

Michigan’s 1099 borrowers are underserved by traditional lenders. With rising home values and increased demand for flexible mortgage solutions, brokers have a massive opportunity to serve this community.

Use NQM Funding’s Quick Quote tool to see how your independent contractor clients can qualify today. Explore our full menu of Non QM Loans and partner with a lender that understands Michigan’s diverse self-employed workforce.