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in Tehachapi, CA
Self-employed borrowers in Tehachapi face unique challenges when securing mortgage financing. Traditional lenders often struggle to verify income for independent contractors and business owners who don't receive W-2s.
Both 1099 loans and bank statement loans offer paths to homeownership for self-employed buyers in Kern County. These non-QM options recognize that tax returns don't always reflect your true earning power or ability to afford a mortgage.
1099 loans use your 1099 forms as the primary income documentation. Lenders review your 1099s from the past one to two years to calculate qualifying income, making this option ideal for contractors with consistent 1099 earnings.
This program works well if you receive most of your income through 1099 forms and maintain steady contractor relationships. The verification process is straightforward when your 1099s clearly show regular income patterns.
Down payment requirements typically start at 10-15% for 1099 loans. Rates vary by borrower profile and market conditions, with your credit score and loan-to-value ratio affecting your final terms.
Bank statement loans analyze deposits from your personal or business accounts over 12 to 24 months. Lenders calculate your income by reviewing total deposits and applying expense ratios based on your business type.
This option shines for business owners who write off significant expenses or have varied income sources beyond 1099s. Your bank statements tell the full story of your cash flow, not just what shows on tax returns.
Expect down payments starting around 10-20% for bank statement programs. The longer your bank statement history and stronger your deposit patterns, the better your rate potential becomes.
The main split comes down to your income documentation. If you earn primarily through 1099 contracts, the 1099 loan path offers simpler verification. Business owners with complex finances or significant write-offs typically benefit more from bank statement analysis.
Bank statement loans require gathering 12-24 months of statements and may involve expense ratio calculations. 1099 loans need fewer documents but work only if your 1099 income is substantial and consistent enough to qualify.
Both programs accommodate self-employed borrowers in Tehachapi who struggle with traditional lending. Your choice depends on which documentation best represents your true earning capacity and which you can more readily provide.
Choose 1099 loans if you work as an independent contractor with steady 1099 income and minimal business expenses. This route works when your forms clearly show your earning power without complex analysis.
Bank statement loans make more sense for business owners who reinvest profits, claim substantial deductions, or receive income through multiple channels. This program reveals your actual cash flow beyond what tax returns show.
Consider your documentation ease and which method presents your income most favorably. Many Tehachapi self-employed buyers consult with a mortgage broker to determine which program offers better terms based on their specific situation.
Some lenders allow hybrid approaches, but you typically apply under one program. A mortgage broker can review your documents and recommend which single path gives you the strongest application.
Non-QM loans including both options often carry slightly higher rates than conventional financing. Rates vary by borrower profile and market conditions, with your credit and down payment affecting final terms.
Most 1099 loan programs require one to two years of forms. Bank statement loans typically need 12 to 24 months of consecutive statements to establish income patterns.
Lenders usually need at least one year of 1099 history to verify consistent income. If you recently transitioned to contract work, bank statement loans may offer more flexibility.
Both programs typically require minimum credit scores around 600-620, though exact requirements vary by lender. Your down payment size can offset lower credit in either program.