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in Hanford, CA
Self-employed borrowers in Hanford face a common problem: qualifying for a mortgage when your income doesn't fit the W-2 mold. Both 1099 loans and bank statement loans solve this issue, but they verify your income differently.
Choosing the wrong program means longer processing times or worse loan terms. The right choice depends on how your business income flows and what documentation you can actually provide.
Most Hanford self-employed buyers qualify for one option better than the other. Understanding which path matches your specific income structure saves weeks of hassle.
1099 loans use your 1099 forms to verify income, just like a W-2 employee shows pay stubs. If you receive 1099-MISC or 1099-NEC forms from clients, this program works with documentation you already have.
Lenders typically average your 1099 income over 12 to 24 months. They look at gross receipts before expenses, which can help if your tax returns show lower net income after business deductions.
This option works best for contractors and freelancers with consistent 1099 income from multiple clients. If most of your revenue comes through documented 1099 forms, this is usually your cleanest approval path.
Bank statement loans analyze deposits in your business or personal accounts over 12 to 24 months. Underwriters calculate average monthly income from your actual cash flow, not tax returns.
This program accepts business bank statements, personal statements, or a combination. Lenders typically use 50% to 100% of deposits as qualifying income, depending on your business type and expense structure.
Bank statement loans work for any self-employed borrower, whether you get 1099 forms or not. Business owners who receive cash, checks, or direct deposits from multiple sources often find this their only viable option.
The core difference is documentation. 1099 loans need paper forms from clients proving income. Bank statement loans need months of account statements showing deposits.
Income calculation also differs significantly. 1099 loans look at what clients paid you. Bank statement loans look at what actually hit your accounts, then apply a percentage based on estimated business expenses.
Rates vary by borrower profile and market conditions. Bank statement loans typically carry slightly higher rates because lenders see more variability in deposit-based income verification.
If you have clean 1099 documentation, that route usually closes faster. If your income comes from sources that don't issue 1099 forms, bank statements become your only option.
Choose 1099 loans if most of your income shows up on paper forms from clients. This works for consultants, freelancers, and independent contractors who receive documented payments. You'll typically see faster processing and cleaner underwriting.
Choose bank statement loans if you receive cash payments, own a business that doesn't issue you 1099s, or have income from multiple sources that don't create paper trails. This includes most retail business owners, cash-based service providers, and gig workers mixing multiple platforms.
Some Hanford borrowers qualify under both programs. When that happens, compare the qualifying income amount each lender calculates. The program showing higher qualifying income usually delivers better loan terms.
Most lenders choose one verification method per loan. Some will review both and use whichever shows higher qualifying income, but you can't combine them to inflate your total.
Rates vary by borrower profile and market conditions. 1099 loans typically price slightly better due to clearer income documentation, but your specific rate depends on credit score and down payment.
Most lenders want 12 to 24 months in the same line of work. Some accept less with strong compensating factors like high credit scores or large down payments.
Lenders average your income over the review period. A drop hurts your qualifying amount, and some lenders won't approve if income declined more than 20% year-over-year.
Most bank statement programs require 12 months minimum. Newer businesses typically need to wait or explore other non-QM options with alternative documentation.