W-2 income generally counts as it appears on your pay stub; 1099 income only counts after a full analysis of the tax return behind it. A 1099 by itself tells a lender almost nothing usable. It shows gross payments with no window into the expenses of the business that earned them. To get a qualifying figure, the lender goes to your actual return, the Schedule C for a sole proprietor or the 1120, 1120S, or 1065 for an entity, and runs a cash-flow analysis (Fannie Mae's Form 1084) that starts from the net profit you reported and adds back certain non-cash items like depreciation. For loans backed by Fannie Mae, Freddie Mac, FHA, and VA, that tax-return analysis is required. Some non-QM lenders will lend off 1099s directly without it, and you generally pay for that convenience with a higher rate. One warning from experience: by our estimate, well over 90% of loan officers cannot correctly calculate income from a tax return, which is exactly why underwriters re-check it. We knew a loan officer 25 years into his career who openly admitted he never analyzes returns at all and just sends everything to underwriting. So if your income is 1099 or self-employed, your qualifying figure depends entirely on how your return is read, and small errors move it a lot. Get it analyzed by someone who does this correctly before you settle on a price range or write an offer. For self-employed buyers, that review is the heart of the free Roadmap conversation, where we run your real numbers.