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in Fowler, CA
Most Fowler self-employed borrowers assume they need traditional tax returns to qualify for a mortgage. Both 1099 loans and bank statement loans skip that requirement, but they verify your income in completely different ways.
The right choice depends on how you file taxes and whether you claim heavy business deductions. One loan type rewards conservative tax planning while the other looks at actual cash flow.
1099 loans use your 1099 forms from the past two years to prove income. Lenders calculate qualifying income by averaging your gross 1099 earnings, then applying an expense ratio between 0% and 50% depending on your industry.
This works best if you don't claim many business deductions on Schedule C. A Fowler contractor earning $120,000 in 1099 income with minimal write-offs qualifies stronger than someone showing $60,000 after deductions.
Most lenders require 620+ credit and 15-20% down. You'll need two years of consistent 1099 income from the same line of work, not just scattered freelance gigs.
Bank statement loans analyze 12 to 24 months of business or personal bank deposits. Lenders calculate your monthly income by averaging deposits, then subtract an expense factor that typically ranges from 25% to 50%.
This approach favors aggressive tax filers who write off everything possible. Your actual cash flow matters more than what you report to the IRS, which helps Fowler business owners who maximize deductions.
Credit requirements start at 620, but some lenders go to 600. Down payments run 10-20% depending on your deposit consistency and whether you use business or personal statements.
The documentation gap is massive. 1099 loans need your actual 1099 forms plus a profit and loss statement, while bank statement loans require months of account history instead.
Income calculation favors different tax strategies. If you report $100,000 in 1099 income with $20,000 in deductions, the 1099 loan uses closer to your gross figure. Bank statement loans care only about deposits hitting your account.
Rates vary by borrower profile and market conditions, but bank statement loans often price 0.25% to 0.50% higher due to increased underwriting complexity. Processing timelines run similar at 30 to 45 days for both.
Choose 1099 loans if you file conservative tax returns and report most of your income. Fowler contractors who don't claim major equipment purchases or home office deductions qualify easier this route.
Pick bank statement loans if you maximize write-offs and your tax returns don't reflect true earning power. Self-employed borrowers claiming 40-60% business expense deductions often double their qualifying income by showing deposits instead.
Neither option works if you've been self-employed less than two years or switch industries frequently. You need consistent income history regardless of which documentation method you choose.
No, lenders pick one income calculation method per loan. You'll strengthen your application by choosing the approach that shows higher qualifying income.
Bank statement loans handle LLC structures easily using business account deposits. 1099 loans work only if you receive actual 1099 forms, not K-1 distributions.
Both take 30-45 days typically. Bank statement loans sometimes slow down if your deposits show irregular patterns that require explanation.
Yes, both work for refinances and purchases. The same income documentation and credit requirements apply regardless of transaction type.
Lenders will consider all consistent 1099 income streams. You need two-year history for each source to include it in qualification calculations.