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in Plymouth, CA
Most self-employed borrowers in Plymouth hit a wall with traditional mortgages because they write off too much income. Both 1099 loans and bank statement loans solve this problem, but they verify your earnings in completely different ways.
Your best option depends on how you get paid and what your bank deposits actually show. One requires clean 1099 forms, the other scrutinizes every deposit for 12 to 24 months.
1099 loans use your 1099-MISC or 1099-NEC forms to prove income without digging into tax returns. Lenders typically average your last two years of 1099 income to calculate what you can borrow.
This works best for contractors who receive consistent 1099 payments from established clients. Your income verification stays straightforward because the forms already document gross earnings before expenses.
Most programs require 620 minimum credit and 15-20% down for Plymouth properties. Rates run 1-2% higher than conventional loans because lenders assume more risk without full tax documentation.
Bank statement loans analyze 12 to 24 months of business or personal deposits to calculate income. Underwriters look at total deposits, subtract obvious transfers and reimbursements, then apply an expense ratio.
This option works for any self-employed borrower who shows consistent deposits, whether you're a 1099 contractor, business owner, or freelancer. Your actual bank activity matters more than how clients pay you.
Expect 620 minimum credit and 15-20% down for Plymouth homes. The longer bank statement period you provide (24 months vs 12), the better your rate and terms typically get.
The fundamental split: 1099 loans need formal payment documentation while bank statement loans only care about deposits. If clients pay you through multiple channels or cash transactions hit your account regularly, bank statements capture everything.
Documentation burden differs dramatically. You'll gather 2-3 years of 1099 forms versus printing 12-24 months of bank statements with every page and transaction visible.
Income calculation methods create different qualifying amounts. 1099 loans use gross amounts shown on forms. Bank statement loans apply expense ratios (typically 25-50% depending on your industry) to total deposits, which might help or hurt depending on your actual expenses.
Choose 1099 loans if you receive most income through traditional contractor relationships that generate clean forms. This path works when your payment structure is already documented and your 1099 income alone qualifies you for the Plymouth home you want.
Go with bank statement loans if you mix income sources, receive cash payments, or operate through an S-corp or LLC that complicates 1099 reporting. This option also helps when clients pay through platforms that don't issue 1099s or when your forms understate actual earning power.
Both loans cost more than conventional financing but serve borrowers traditional underwriting rejects. Run the numbers both ways with actual documentation before deciding which path makes sense.
No, lenders structure these as separate programs with different underwriting. Pick the documentation method that shows your income most favorably and stick with it.
1099 loans typically close 5-7 days faster because underwriters review fewer documents. Bank statement analysis takes longer with 12-24 months of transactions to verify.
Yes, but expect higher rates and 20-25% down for investment properties versus primary residences. Some lenders cap total properties you can finance this way.
Seasonal businesses struggle with bank statement loans since underwriters average income across all months. Consistent 1099 forms work better if deposits fluctuate significantly.
Yes, but gather all documentation upfront so your broker can run both scenarios. Rates vary by borrower profile and switching mid-process delays closing.