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in Kerman, CA
If you're self-employed in Kerman, you already know traditional mortgages weren't built for you. Most lenders want W-2s and paystubs you don't have.
Both 1099 loans and bank statement loans solve that problem, but they verify income differently. The right choice depends on how you structure your business and what shows up in your accounts.
1099 loans use your 1099 forms from the past one to two years to prove income. Lenders calculate your qualifying income by averaging what you earned from clients, minus a standard percentage for business expenses.
This works well if you receive most income via 1099s and your tax returns show healthy earnings. Your CPA files can go straight to underwriting without repackaging your financials.
Most programs require 10-20% down and credit scores above 640. Rates run higher than conventional loans because these are non-QM products with more flexible documentation standards.
Bank statement loans skip tax returns entirely. Lenders review 12 or 24 months of business or personal bank statements to calculate your monthly income based on deposits.
Underwriters apply expense ratios—typically 25% to 50%—to account for business costs not shown on your statements. If you deposit $10,000 monthly and the lender uses a 50% ratio, you qualify on $5,000.
This option shines for borrowers who write off heavy deductions or mix business and personal funds. You prove income through cash flow, not what you reported to the IRS.
The core split: 1099 loans rely on filed tax documents while bank statement loans rely on actual deposits. If your tax returns show strong income, go with 1099. If you write off most earnings, bank statements tell a better story.
Down payments and rates overlap on both programs—expect 15-20% down and rates 1-2% above conventional. Credit score minimums hover around 640, though some lenders accept lower scores with larger down payments.
Processing time favors 1099 loans because tax forms are standardized. Bank statement loans take longer as underwriters manually review months of transactions to verify deposits and filter out transfers or one-time windfalls.
Choose 1099 loans if you have clean 1099 income from multiple clients and your tax returns reflect what you actually earn. This path is simpler and faster when your documentation is already organized.
Pick bank statement loans if you're a business owner with significant deductions, irregular 1099 income, or commingled accounts. You'll qualify on cash flow instead of taxable income—often a much higher number.
Many Kerman self-employed borrowers fit both profiles. Run the math both ways with a broker who can calculate qualifying income under each method before choosing.
No, lenders pick one income verification method per loan. You'll apply under either 1099 or bank statement guidelines, not a combination of both.
Rates are similar on both programs, typically 1-2% above conventional loans. Your credit score and down payment affect pricing more than the income documentation type.
Not always, but lenders want proof you're self-employed. 1099 forms or consistent business deposits serve as that proof without requiring a formal license.
1099 loans typically require one to two years of forms. Bank statement loans need 12 or 24 months of consecutive statements with no gaps.
Generally no. Both programs require at least 12 months of self-employed income history to show your earnings are stable and ongoing.