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in Firebaugh, CA
Self-employed borrowers in Firebaugh face a choice between two non-QM paths. Both skip traditional pay stubs, but they verify income differently.
1099 loans work off tax filings while bank statement loans track deposits. Your business structure and how you report income determines which one gets you approved.
Most Firebaugh contractors fall into one camp or the other based on write-offs. Heavy deductions make bank statements the better play.
1099 loans qualify you based on your tax returns and 1099 forms. Lenders average your reported income over 1-2 years to calculate what you can borrow.
This works great if you claim minimal business deductions. The more income you show the IRS, the more buying power you get.
Expect 20% down minimum and rates 1-2% above conventional. Credit requirements usually start at 620, though 660+ gets better pricing.
Bank statement loans bypass tax returns entirely. Lenders review 12-24 months of business or personal bank deposits to prove income.
They calculate your average monthly deposits and apply a standard expense ratio. Most lenders assume 25-50% of deposits are expenses, depending on your industry.
Same down payment expectation as 1099 loans—20% minimum. Rates run similar, but some lenders price bank statement programs slightly higher due to documentation complexity.
The core split is what income number you want lenders to see. 1099 loans lock you into your taxable income, while bank statement loans look at gross deposits before write-offs.
If you wrote off $60K in business expenses last year, your 1099 income looks weak. But your bank statements show the full cash flow, giving you stronger qualification numbers.
Documentation effort differs too. 1099 loans need tax returns, 1099 forms, and sometimes a P&L. Bank statement loans just need statements—no CPA letter, no return transcripts.
Choose 1099 loans if you file conservative returns with low deductions. You save on rates and deal with fewer verification questions since lenders trust IRS data.
Pick bank statement loans if you maximize write-offs for tax purposes. The deposit method ignores deductions, so your qualification income stays higher.
Most Firebaugh ag contractors and truckers lean toward bank statements. Their expenses run high, but cash flow stays strong—perfect for the deposit method.
Run the math both ways before committing. Pull your last two years of returns and compare reported income against average monthly deposits times 12.
No. Lenders pick one method per file. Mixing documentation creates underwriting conflicts and typically gets rejected.
Yes. Both typically need 20% down minimum. Some lenders offer 15% programs with higher rates and stricter credit requirements.
Bank statement loans usually close quicker. Tax return verification involves IRS transcripts, which add 7-10 days to processing time.
Yes, but it restarts underwriting. You'll need to submit new documentation and expect delays of 2-3 weeks.
Both average income over time, smoothing seasonal gaps. Bank statements handle irregular deposits better than lumpy 1099 income.