I guess YMMV, but I can tell you without a doubt that lenders in my area of Virginia will not make an exception. They have to see two full years of 1099 income via tax returns in order to count 1099 income at all. They will take an average of the two years. They will not even accept a partial year with filed schedule C's or anything like that. That said, if I were you I'd keep the W-2 income until the loan process is over with. If that can cover your requirements for the loan, you should be fine.
It would probably be worth checking with a loan officer just to be sure, but our experience led me to believe that there is little to no latitude in this area. Lenders are extremely nervous about self employed borrowers, so they are incredibly stringent. So long as you have all the proper paperwork and can meet those requirements it won't be a problem, but I would not expect them to make any kind of an exception.
I don't want to discourage you, as your numbers sound very good considering the amount of loan you are looking for. However, if you have the option I highly recommend you go W-2 until the process is finished. This issue was a big part of my mortgage stress, and I've been self employed for almost ten years now.
