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in Bakersfield, CA
Self-employed borrowers in Bakersfield face unique challenges when securing a mortgage. Traditional lenders often struggle to assess income that doesn't come from a W-2.
Both 1099 loans and bank statement loans offer paths to homeownership for independent contractors and business owners. Each uses different documentation to prove your ability to repay.
Understanding which option aligns with how you receive and manage income makes the difference between a smooth approval and unnecessary roadblocks.
1099 loans use your 1099 forms to verify income, making them ideal for independent contractors who receive most earnings this way. Lenders typically review one to two years of 1099s to establish consistent income.
This option works well when your 1099 income shows stability and growth. The documentation process is straightforward if you keep organized tax records.
Rates vary by borrower profile and market conditions. Expect higher rates than conventional loans but competitive terms among non-QM options.
Bank statement loans analyze 12 to 24 months of personal or business bank deposits to calculate income. This approach bypasses tax returns entirely, which helps borrowers who maximize deductions.
Lenders review deposits to identify income patterns and sustainability. They filter out transfers and non-income transactions to arrive at a qualifying figure.
These loans offer flexibility for business owners whose tax returns don't reflect actual cash flow. Rates vary by borrower profile and market conditions.
The primary difference lies in documentation: 1099 loans require tax forms showing income, while bank statement loans use deposit history. Your choice depends on which better represents your financial strength.
1099 loans favor borrowers with straightforward contractor income and minimal deductions. Bank statement loans benefit those who write off significant business expenses, making taxable income appear lower than actual earnings.
Processing timelines differ slightly. Bank statement loans often require more detailed analysis of deposits, while 1099 loans follow a more standardized underwriting path.
Down payment requirements typically range from 10% to 20% for both options. Credit score minimums generally start around 620, though higher scores unlock better terms.
Choose 1099 loans if you receive most income via 1099 forms and don't take extensive business deductions. This path offers cleaner documentation and often faster processing.
Pick bank statement loans when your tax returns understate cash flow due to legitimate business expenses. Business owners with significant write-offs typically qualify for larger loan amounts this way.
Consider your record-keeping habits. Do you have organized 1099s or detailed bank statements readily available? Your existing documentation often points to the easier path.
Working with a broker experienced in both products helps match your specific income situation to the right loan structure. Every self-employed borrower's financial picture is unique.
Some lenders allow hybrid approaches, but most programs require choosing one income documentation method. A broker can identify lenders with flexible underwriting if your situation benefits from combining sources.
Rates vary by borrower profile and market conditions. Generally, both carry similar pricing as non-QM products. Your credit score, down payment, and income stability impact rates more than loan type.
Most lenders use 50% to 100% of average deposits after excluding transfers and one-time transactions. The exact percentage depends on the specific program and your expense ratio.
Most programs require at least one year of self-employment history, with two years preferred. Some lenders offer flexibility if you transitioned from W-2 work in the same field.
Yes, both 1099 and bank statement loans work for investment properties in Bakersfield. Expect higher down payments and rates for non-owner occupied purchases compared to primary residences.