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in Corcoran, CA
Both 1099 loans and bank statement loans serve self-employed borrowers in Corcoran, but they verify income differently. Your choice depends on whether your 1099s show consistent income or if your bank deposits tell a better story.
Most lenders turned you down because traditional underwriting doesn't work for self-employed borrowers. These non-QM options look past your tax returns to approve loans based on actual cash flow.
Rates vary by borrower profile and market conditions. Both programs require larger down payments than conventional loans, typically 10-20% depending on credit and documentation strength.
1099 loans verify income using your 1099 forms from the past two years. Underwriters calculate your qualifying income by averaging these forms, making this option ideal if your 1099s show strong, consistent earnings.
You need at least two years of 1099 history in the same field. Lenders typically allow business expense deductions, but they scrutinize income stability more than traditional W-2 employment.
This works best for contractors with steady clients and predictable income. If you took large write-offs or your 1099s fluctuate significantly, bank statements might qualify you for more.
Bank statement loans analyze 12 or 24 months of personal or business bank statements. Lenders calculate income by reviewing deposits and applying an expense factor, usually 25-50% depending on your business type.
This program works when your bank deposits exceed what your tax returns show. Many self-employed borrowers write off expenses aggressively, and bank statements reveal true cash flow that 1099s miss.
You can use personal statements, business statements, or both. Lenders look for consistent deposits without large one-time transfers or loans that inflate your balance.
The main split comes down to documentation: 1099 loans rely on tax documents while bank statement loans use deposit history. If you maximize write-offs and show minimal taxable income, bank statements typically qualify you for higher loan amounts.
1099 loans often carry slightly lower rates because the income documentation mirrors traditional verification more closely. Bank statement loans require deeper underwriting and price accordingly, usually 0.25-0.75% higher.
Credit requirements run similar for both, typically 620 minimum for lower loan amounts. Stronger credit scores above 680 unlock better pricing and higher leverage on either program.
Choose 1099 loans if your forms show strong income and you don't write off everything. This path offers simpler documentation and often better pricing for contractors with clean tax returns.
Pick bank statement loans if you take aggressive deductions or your deposits significantly exceed reported income. This works for business owners, real estate agents, and contractors who show minimal taxable income but generate solid cash flow.
In Corcoran's market, both options open doors traditional lenders close. The right choice depends on which documentation tells your income story more accurately.
Yes, most lenders let you switch if one method qualifies you better. We often run both scenarios upfront to see which delivers higher approval amounts.
Yes, lenders still want two years of returns to verify tax compliance. They just don't use them as the primary income calculation.
1099 loans typically close 3-5 days faster because the documentation is simpler. Bank statement reviews take longer as underwriters analyze every deposit.
Some lenders allow hybrid approaches, but most require one verification method. Mixing documentation usually adds complexity without improving qualification.
Expect 15-20% down for most scenarios. Stronger credit and documentation can lower this to 10% with certain lenders.