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in Lakeport, CA
Both 1099 loans and bank statement loans help self-employed borrowers in Lakeport qualify without traditional W-2 income. The key difference is how lenders calculate your qualifying income—one uses tax returns, the other uses deposits.
Most contractors, freelancers, and business owners pick between these two based on how they manage write-offs. Your choice affects your loan amount, rate, and how much documentation you'll provide.
1099 loans use your tax returns to verify income, just like conventional loans—but with more flexible underwriting. Lenders review your 1099 forms and calculate income from the last two years of returns.
This program works best if you file accurate tax returns and don't write off most of your gross income. You'll need decent credit—typically 620 minimum—and at least 10-15% down for most properties in Lake County.
Bank statement loans skip tax returns entirely and calculate income from 12-24 months of personal or business bank deposits. Lenders analyze your average monthly deposits, then apply a percentage to determine qualifying income.
This option fits business owners who write off significant expenses and show low taxable income on paper. You'll pay a slightly higher rate than 1099 loans, but you can qualify for much larger loan amounts if your bank deposits are strong.
The biggest split is documentation: 1099 loans require filed tax returns showing qualifying income, while bank statement loans only need deposit activity. If you write off 60% of your gross income, tax returns will kill your buying power—bank statements won't.
Rates differ by about 0.5-1% on average. Bank statement loans typically cost more because lenders view deposit-based income as higher risk. Down payment requirements are similar—both usually need 15-20% down in Lakeport's market.
Pick 1099 loans if you file clean tax returns and show at least 50-60% of your gross income. You'll get better rates and simpler underwriting. Choose bank statement loans if you write off most income and your deposits prove you earn more than your tax returns show.
Most Lake County self-employed borrowers making over $100K gross choose bank statements—the higher rate is worth the extra buying power. If you're buying under $400K and show solid taxable income, 1099 loans usually make more sense.
No, you pick one income calculation method per loan. Most lenders won't blend 1099 and bank statement documentation—you'll choose whichever shows stronger qualifying income.
1099 loans close slightly faster since tax returns are simpler to verify. Bank statement loans need more underwriter review of deposit patterns, adding 3-5 days to timeline.
Yes, but bank statement loans offer more flexibility. You can use rental deposits in your bank statements as qualifying income on some programs.
Most lenders need two years for 1099 loans. Bank statement programs sometimes accept 12 months if deposits are consistent and credit is strong.
Closing costs are nearly identical. The rate difference on bank statement loans means you'll pay more interest over time, not more upfront.