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in Parlier, CA
Self-employed borrowers in Parlier face a common problem: traditional lenders want W-2s you don't have. Both 1099 loans and bank statement loans solve this, but they verify your income in different ways.
Your choice depends on how you run your business. 1099 contractors with clean tax returns often prefer one route. Business owners who write off everything favor the other.
Both are non-QM loans, meaning they don't follow Fannie Mae and Freddie Mac rules. Rates vary by borrower profile and market conditions, but expect higher rates than conventional loans.
1099 loans use your tax returns to prove income. Lenders review your 1099 forms and calculate qualifying income from what you reported to the IRS. This works well if you don't take heavy business deductions.
You'll need one to two years of 1099 forms and personal tax returns. Lenders typically qualify you on the average income across both years. Credit score minimums usually start at 620.
This loan makes sense for contractors who keep business expenses low. Freelancers, consultants, and gig workers with straightforward tax filings often get better results with 1099 documentation.
Bank statement loans skip tax returns entirely. Lenders review 12 to 24 months of business or personal bank deposits to calculate your income. This helps borrowers who show lower taxable income due to business deductions.
Underwriters analyze your deposits and apply an expense ratio. Most lenders assume 25% to 50% of deposits go to business expenses. The rest counts as qualifying income for your mortgage.
This option works for business owners with significant write-offs. Parlier entrepreneurs running retail, service, or agricultural businesses often prefer bank statement loans because they show higher income than tax returns reveal.
The core split comes down to documentation. 1099 loans rely on what you told the IRS. Bank statement loans rely on what actually hit your account. If those two numbers differ significantly, you'll favor one over the other.
Bank statement loans typically require larger down payments. You'll often need 10% to 20% down compared to 5% to 10% for some 1099 programs. Rates on bank statement loans also run slightly higher in most cases.
Processing time differs too. 1099 loans move faster because tax returns are straightforward. Bank statement loans take longer as underwriters analyze months of transaction data looking for consistent deposits.
Choose 1099 loans if your tax returns reflect your actual earning power. Contractors who don't operate as formal businesses and freelancers with minimal expenses usually qualify for better terms this way.
Pick bank statement loans if you run a real business with substantial deductions. The more you write off, the bigger the gap between your tax return income and bank deposits. Agricultural contractors and Parlier business owners often fall into this category.
Some borrowers qualify under both programs but get different loan amounts. A good broker runs both scenarios. We compare what each method shows for income and find which gets you the home you want.
No, you pick one documentation method per loan. Some lenders allow mixing income sources, but the verification method stays consistent.
1099 loans typically price slightly better because they use tax returns. Bank statement loans carry more risk for lenders, so rates run higher.
Yes, but minimum down payments increase. Expect 20% to 25% down for investment properties under either program.
1099 loans need one to two years of tax returns. Bank statement loans require 12 to 24 months of consecutive statements.
Bank statement loans handle irregular income better. Lenders average your deposits across 12 or 24 months to smooth out fluctuations.