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in Arcadia, CA
Both 1099 and bank statement loans serve self-employed borrowers in Arcadia, but they verify income differently. One uses your tax forms, the other uses your deposits.
The right choice depends on how you structure your business income and what shows up on paper. Most consultants and gig workers fit one better than the other.
1099 loans use your actual 1099 forms to prove income. Lenders average the last two years of 1099 earnings to calculate what you qualify for.
This works best if you don't write off much on taxes. The income on your 1099s needs to support the mortgage payment without heavy deductions eating into your qualifying amount.
You'll need two years of 1099 history with the same type of work. Lenders want consistency, not someone who switched from Uber to consulting six months ago.
Bank statement loans ignore your tax returns entirely. Lenders pull 12 to 24 months of business or personal bank statements and calculate income from deposits.
They typically use 50% to 75% of your average monthly deposits as qualifying income. The exact percentage depends on your business type and expense profile.
This option shines when you write off significant expenses. Your bank deposits show the real cash flow before deductions tank your taxable income.
The core split is tax returns versus cash flow. 1099 loans care about what you reported to the IRS. Bank statement loans care about what actually hit your account.
Bank statement loans typically cost more. Expect rates 0.5% to 1% higher than 1099 loans because lenders see more verification risk with deposit-based underwriting.
Documentation differs sharply. 1099 loans need clean tax transcripts and 1099 forms. Bank statement loans need consecutive months of statements with no gaps or unexplained large deposits.
Choose 1099 loans if your tax returns show strong income and you don't write off half your revenue. This path costs less and underwriting moves faster with clean 1099s.
Pick bank statement loans if you're a heavy write-off borrower. Real estate agents, contractors, and business owners who expense aggressively almost always qualify for more this way.
Run the numbers both ways before deciding. Some Arcadia borrowers discover they qualify for $200k more using bank statements despite the rate trade-off.
No. Lenders pick one income verification method per loan. You can't mix 1099 documentation with bank statement analysis on a single application.
1099 loans typically price 0.5% to 1% lower than bank statement loans. Rates vary by borrower profile and market conditions.
Yes for 1099 loans. Bank statement loans sometimes accept 12 months if deposits show strong, consistent income throughout that period.
Most lenders want 640 minimum for both options. Some bank statement programs go down to 600 with larger down payments.
Yes. Many self-employed borrowers in Arcadia use personal accounts, especially sole proprietors who run income through personal checking.