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in Coalinga, CA
Self-employed borrowers in Coalinga face a choice between two non-QM paths. Both skip traditional tax returns, but they verify income differently.
1099 loans lean on your contractor statements. Bank statement loans read your deposits. Your income structure determines which one actually works.
Most Coalinga self-employed borrowers qualify for one but not both. Understanding the difference saves you weeks of wasted paperwork.
1099 loans use your contractor income statements to prove earnings. Lenders add up your 1099 forms from the past one or two years and calculate a monthly average.
This path works cleanest for contractors with steady clients who issue proper 1099-NEC or 1099-MISC forms. You need minimal business expenses eating into that gross income.
Credit requirements start around 620, though most approvals land above 660. Expect 15-20% down for purchase loans in Fresno County.
The catch: lenders can't account for income that doesn't show on a 1099. Side gigs paid in cash or through payment apps create gaps.
Bank statement loans analyze 12 or 24 months of business or personal account deposits. Lenders calculate your average monthly income from the total deposits minus transfers and non-income items.
This option captures income that never generates a 1099. Cash businesses, gig work through apps, and mixed income streams all show up in deposits.
Most programs accept personal bank statements, but business accounts typically yield higher qualifying income. Lenders apply an expense ratio, usually 25-50%, before calculating your usable income.
Down payment requirements mirror 1099 loans at 15-20% for most borrowers. Credit standards start around 620 but competitive rates need 680 plus.
The core split comes down to income documentation. 1099 loans need formal contractor statements. Bank statement loans just need consistent deposits.
Expense treatment separates these paths dramatically. A 1099 loan uses gross contractor income with minimal deductions. Bank statement loans automatically deduct 25-50% for assumed business expenses.
If you show 10k monthly on 1099 forms, lenders might qualify you on 9k. If you deposit 10k monthly, bank statement lenders qualify you on 5k to 7.5k after expense ratios.
Rate differences stay narrow. Both programs price similarly since they carry non-QM risk. Your credit score and down payment move rates more than the program choice.
Pick 1099 loans if you receive formal contractor statements and run a low-expense business. Consultants, IT contractors, and professional services fit this profile cleanly.
Choose bank statement loans if your income comes through multiple channels, includes cash payments, or you lack consistent 1099 documentation. Contractors with high material costs also benefit from showing net deposits instead of gross 1099 income.
Run the math both ways before choosing. A Coalinga contractor earning 120k on 1099 forms qualifies on roughly 110k. That same contractor with 10k monthly deposits qualifies on 60k to 90k depending on expense ratios.
Some borrowers qualify under both programs but get better terms with one path. A broker should calculate your maximum loan amount each way before you commit to documentation.
No, lenders pick one documentation method per loan. You can't mix 1099 income with bank statement analysis on the same application.
Rates run nearly identical since both are non-QM products. Your credit score and down payment move pricing more than the income documentation type.
Most programs require 12 or 24 months of consecutive statements. Lenders won't accept gaps or cherry-picked months.
Yes, both programs typically require 24 months in your current business or industry. Exceptions exist for seasoned professionals switching to contract work.
Lenders average the total annual 1099 income across 12 months. Seasonal fluctuations don't disqualify you as long as the annual total supports the loan.