1099 Income Refinance in Arizona 2026: Qualify Without Tax Returns

Here is the situation we see three or four times a month. Somebody made $180,000 last year, every dollar of it reported on 1099 forms, and their tax return says they made $108,000 because their CPA did exactly the job they were hired to do. Then they go to refinance and a retail lender tells them they do not make enough money. Both things are true at once, and there is a loan built for that gap.

What a 1099 income refinance actually is

A 1099 income refinance is a Non-QM loan that documents your income with the 1099 forms your payers issued you, rather than with tax returns or bank statement averaging. The lender takes your gross 1099 total, subtracts an expense factor, and uses what remains as qualifying income.

Non-QM means it sits outside the Qualified Mortgage safe harbor defined in the Consumer Financial Protection Bureau's ability to repay rule at 12 CFR 1026.43. That is not a warning label. It means the lender still has to verify you can repay the loan, but it gets to do so with documentation Fannie Mae and Freddie Mac would not accept. Every one of these programs is written by an individual wholesale lender, so guidelines genuinely differ from one to the next, which is the whole reason to work with a broker on this rather than a single bank.

The 1099 forms themselves matter. Most programs want IRS Form 1099-NEC for nonemployee compensation, and some will accept 1099-MISC or 1099-K depending on how you are paid. If your income arrives through a mix of forms, say that out loud on the first call, because it changes which lenders will look at the file.

The math, with a real example

The difference between a full doc refinance and a 1099 income refinance is what happens to your write offs. Full doc counts your net. A 1099 program never sees your Schedule C at all.

Illustration only, not a quote. Expense factors and debt to income ceilings are set by each wholesale lender and vary with credit score, equity, and occupancy.

That $3,750 a month of extra qualifying income is the entire product. It is also why the rate is higher: the lender is accepting more uncertainty and pricing for it. If your tax returns already support the loan, take the conventional loan and do not read any further.

Who this is built for in Arizona

The typical file looks like one of these:

• Real estate agents and loan officers. Commission income, paid on 1099, heavy deductions for marketing, mileage, and dues.
• Insurance and medical sales reps across Scottsdale and the Phoenix metro who are paid entirely on 1099 with expense heavy returns.
• Contract healthcare workers. Travel nurses, CRNAs, and med spa injectors working 1099 rather than W2.
• Trades and construction subs who take 1099s from three or four general contractors and write off equipment aggressively.
• Consultants and creatives with a handful of retainer clients and no payroll of their own.

What these have in common is documented, traceable income from third parties who filed a form with the IRS. That is the strength of the 1099 program over a bank statement loan: a 1099 is a third party document. Deposits into your checking account are not. When both programs are available, the 1099 file usually prices better and underwrites faster. Our comparison of bank statement refinances for self employed Arizona homeowners walks through when the other route wins instead.

If your income is mixed, part W2 and part 1099, this is probably the wrong product. Same answer if you have been 1099 for four months. Two years is the comfortable standard, one year is workable with industry history, and anything shorter is a conversation about waiting.

Estimate your new payment

What you need and how long it takes

The document list is short, which is most of the appeal. Plan on the following:

1. One or two years of 1099 forms from every payer, matching the years the lender is using.
2. Year to date proof of income. Usually a current 1099 from a payer, invoices, or a few months of statements showing the deposits continued.
3. Proof you have been self employed two years, which can be a business license, a CPA letter, or a state registration.
4. Two months of asset statements if you need reserves, and most cash out files do.
5. Homeowners insurance and your current mortgage statement.

Timeline runs about 25 to 40 days from application to funding, which is longer than a streamlined agency refinance and shorter than most people expect from Non-QM. The step that adds time is almost always the appraisal, not the income review, because gross 1099 income is a much faster calculation for an underwriter than reconstructing a Schedule C.

Two things to decide up front. First, rate and term or cash out. Cash out caps at a lower loan to value on these programs, so if you want both a lower rate and $80,000 of equity, the equity math has to work first. Our post on how much equity Arizona homeowners actually have in 2026 is the place to start on that. Second, whether a 1099 loan is even the right tool. If you own rentals, compare it to a DSCR loan, and if you hold the property in an entity, see refinancing a rental held in an LLC. For the wider view of self employed options, our Non-QM refinance guide for Arizona covers the full menu, and the self employed refinance overview compares them side by side.

Because these programs are lender specific, the spread between the best and worst offer on the same file is wider than on a conventional loan. That is the argument for shopping it. Our self employed loan programs page shows what we run, our full program list covers everything else, and if you are also house hunting you can browse current Scottsdale and Phoenix listings at Arizona Luxury Property Search. You can reach our team at Pillar Mortgage Group any time.

Honest caveat: this loan is wrong for a lot of people who ask about it. If your tax returns support the payment, a conventional refinance will beat it on rate every single time and you should take that instead. If you are a W2 employee with a small 1099 side income, this is not your product. If you have less than a year of 1099 history, the honest answer is wait, keep the income clean, and come back. And if you are refinancing purely to lower a rate, run the break even before you spend a dollar, because a higher Non-QM rate can quietly erase the savings you were chasing.

Frequently asked questions

Can I refinance in Arizona using only my 1099 income?

Yes. A 1099 income refinance qualifies you on the gross income reported on your 1099 forms instead of the net income on your tax returns. Most programs want one or two years of 1099s plus year to date proof of income, and no tax returns are required. It is a Non-QM product, so guidelines are set by the individual lender rather than by Fannie Mae or Freddie Mac.

How much of my 1099 income do lenders actually count?

Most lenders apply an expense factor and count what is left, commonly 75 to 90 percent of gross. On $180,000 of 1099 income a 15 percent expense factor leaves $153,000, or $12,750 a month of qualifying income. Some lenders will use a lower factor if your CPA provides a letter documenting your actual business expenses.

Do I need two years of 1099s to refinance?

Not always. Many Arizona lenders will work with a single year of 1099s if you have documented experience in the same line of work, though a two year history usually prices better and opens more programs. Twelve month programs almost always come with either a rate premium or a lower maximum loan to value.

Is a 1099 income refinance more expensive than a conventional refinance?

Yes. Expect a higher rate than a conventional loan, plus a larger equity requirement, typically 10 to 25 percent depending on credit and occupancy. Freddie Mac put the average 30 year conventional rate at 6.71 percent the week of September 3, 2026, and Non-QM 1099 programs price meaningfully above that. The tradeoff is qualifying at all when tax return income will not support the loan.

Can I take cash out with a 1099 income refinance?

Yes, and it is the most common reason people use these programs. Cash out on a 1099 income loan usually caps out at a lower loan to value than a rate and term refinance, often around 75 to 80 percent for a primary residence. Investment properties sit lower still.

Does a 1099 income refinance work for a rental property?

It can, but a DSCR loan is often the better tool for a rental, because DSCR qualifies on the property's rent rather than on your personal income at all. If you own the rental in an LLC, that changes the paperwork more than it changes the approval.