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in Wasco, CA
Self-employed borrowers in Wasco have two strong options for mortgage financing when traditional income verification doesn't fit. Both 1099 loans and bank statement loans offer paths to homeownership for independent contractors, freelancers, and business owners in Kern County.
Understanding the differences between these non-QM loan programs helps you choose the option that matches how you document income. Each approach verifies your earnings differently, affecting qualification requirements and the documentation you'll need.
1099 loans use your 1099 forms to verify income, making them ideal for contractors and freelancers who receive this tax document from clients. Lenders typically review one to two years of 1099s to calculate your qualifying income.
This option works well if you have consistent 1099 income from multiple clients or a few major contracts. You'll need less documentation than traditional loans, though rates vary by borrower profile and market conditions.
Many Wasco borrowers prefer this route when they have straightforward 1099 income without significant business expenses that reduce their taxable income on tax returns.
Bank statement loans analyze 12 to 24 months of business or personal bank deposits to determine your income. Lenders calculate average monthly deposits and apply them toward qualifying income.
This option benefits self-employed borrowers who have significant business expenses or write-offs that lower their tax returns. Your actual cash flow matters more than what appears on tax documents.
Wasco business owners often choose this route when their bank statements better reflect their true earning capacity than 1099s or tax returns alone.
The main difference lies in documentation: 1099 loans require tax forms showing income received, while bank statement loans examine actual money flowing through your accounts. Bank statement programs typically allow higher debt-to-income ratios since they often reveal stronger cash flow.
Documentation requirements differ significantly. With 1099 loans, you provide the actual forms plus possibly tax returns. Bank statement loans need consecutive months of statements with clear deposit patterns and explanations for large or irregular deposits.
Approval speed can vary. 1099 loans may process faster when your income is straightforward, while bank statement loans require more analysis of deposit patterns but can overcome tax return limitations.
Choose 1099 loans if you receive most income via 1099 forms, have minimal business expenses, and can qualify based on that reported income. This works best for independent contractors whose tax documents accurately reflect their earning power.
Bank statement loans make more sense when you run a business with significant write-offs, receive income through various channels, or your deposits consistently exceed what tax returns show. This option captures your full financial picture.
Consider your specific situation in Wasco's market. If you maintain organized bank records and have steady deposits, bank statement loans offer flexibility. If your 1099 income tells the complete story, that route provides a more direct path.
Some lenders allow hybrid approaches, but most programs use one primary verification method. Your loan officer will recommend the strongest documentation path for your situation.
Rates vary by borrower profile and market conditions. Both are non-QM loans with similar rate ranges, though your specific credit, down payment, and income stability affect final pricing.
1099 loans typically require 1-2 years of forms plus basic tax documents. Bank statement loans need 12-24 consecutive months of statements with clear deposit trails.
Yes, both loan types can finance primary residences, second homes, and investment properties in Wasco. Qualification requirements may vary based on property type and use.
Bank statement loans often handle seasonal fluctuations better since lenders average deposits over 12-24 months. 1099 loans may require additional explanation for significant year-to-year changes.