So far as I know, there is no way to change the one inch margins in TextEdit's Wrap to Page mode. However, you can create a document and specify the margins in Bean or iTextExpress (both based on TextEdit, and free), then save it (make sure to save as .rtf), and open it in TextEdit, and it'll have the margins specified in the other application. For instance, I have .rtf documents with 1/2-inch and 3/4-inch margins I made in one of those programs; when I double-click them they open in TextEdit and I use them as templates. (Note: Bean is "no longer being actively developed", but it still works fine, and this may be a good thing: Bean doesn't need any more features, it's fine as it is.)
Go to the menu bar and choose File > Page Setup. Click on Paper Size and change US Letter (or whatever the current page size is) to Manage Custom Sizes. I created a new paper size named test and set the margins as seen here:
Click OK to save your new settings. When you start a new document, click on Page Setup and choose your custom page setting.