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in Avenal, CA
Both 1099 loans and bank statement loans help self-employed borrowers in Avenal qualify without W-2s. The main difference is how lenders calculate your income—one uses tax forms, the other uses deposits.
Most self-employed borrowers prefer one over the other based on how they handle business expenses. If you write off a lot on taxes, bank statements usually show higher qualifying income.
1099 loans use your 1099 forms to verify income, just like W-2 borrowers use pay stubs. Lenders review your 1099s from the past two years and calculate an average monthly income.
This works well if your tax returns show strong income after deductions. You need two years of 1099 history in the same field. Credit score minimums typically start at 620, with rates varying by profile.
Bank statement loans use 12 or 24 months of business or personal bank deposits to verify income. Lenders apply a percentage to total deposits—usually 50% for business accounts, higher for personal accounts.
This route works for borrowers who write off significant business expenses. Your bank statements show gross deposits before deductions eat into taxable income. Most lenders require 600-620 minimum credit.
The core difference is simple: 1099 loans look at what you reported to the IRS, bank statement loans look at what hit your account. If you claimed $80K in net income but deposited $150K, bank statements show more qualifying income.
Documentation speed differs too. 1099 loans need your tax transcripts and 1099 forms—straightforward but requires everything filed with the IRS. Bank statement loans need months of statements uploaded, which takes more time to review.
Choose 1099 loans if your tax returns already show enough income to qualify and you have clean 1099 history. Choose bank statement loans if you maximize deductions and your deposits significantly exceed reported income.
Most Avenal borrowers with heavy equipment expenses, home office deductions, or vehicle write-offs qualify for more with bank statements. Contractors who report most income with minimal deductions often prefer the simpler 1099 route. Run both calculations before deciding.
No, lenders use one income calculation method per loan. You pick the route that shows higher qualifying income based on your documentation.
No, you can use personal bank statements if business income flows through them. Lenders apply different percentage calculations based on account type.
Rates are similar for both since they're non-QM programs. Your credit score, down payment, and income strength matter more than which documentation type you choose.
Two years minimum, showing consistent work in the same industry. Lenders average the two years to calculate monthly qualifying income.
Bank statement loans average 12 or 24 months of deposits, smoothing out seasonal fluctuations. Longer statement periods help if your income cycles throughout the year.