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in Artesia, CA
Artesia's self-employed borrowers have two strong non-QM paths to qualification. Both skip tax returns, but they verify income differently.
Your choice depends on how your business income flows. 1099 contractors with clean forms have one route. Business owners with heavy write-offs need another.
1099 loans use your 1099 forms to calculate income. Lenders take the gross amount from your forms, apply a standard expense ratio (usually 10-20%), and that's your qualifying income.
This works best for contractors who receive clean 1099-MISC or 1099-NEC forms. If you get multiple 1099s from different clients and don't run major expenses through your business, this is often the cleaner path.
You'll typically need two years of 1099 forms from the same line of work. Credit minimums start at 620. Rates run 1-2 points above conventional.
Bank statement loans analyze deposits across 12 or 24 months. Underwriters calculate average monthly income, then subtract an expense ratio based on your business type (typically 25-50%).
This program works for any self-employed structure. Sole proprietors, LLC owners, and S-corp shareholders all qualify. You don't need clean 1099s or any particular income documentation beyond bank statements.
The longer statement period you provide (24 months vs 12), the better your rate. Most lenders require 640 credit minimum. Expect rates 1.5-2.5 points above conventional.
The core split: 1099 loans give you credit for gross income on your forms. Bank statement loans look at actual deposits. If your 1099s show $200K but you write off $80K in expenses that don't show up on forms, bank statements capture the real cash flow.
Documentation is simpler with 1099 loans. You hand over two years of forms and you're done. Bank statements require 12-24 months of statements, often from multiple accounts if you run business and personal funds separately.
Expense ratios hit differently. 1099 loans assume 10-20% expenses regardless of your actual costs. Bank statement loans use industry-specific ratios that range from 25% for service businesses to 50% for retail or restaurants.
Go with 1099 loans if you're a contractor getting multiple 1099 forms and running a lean operation. Consultants, gig workers, and freelancers with low overhead get higher qualifying income this way.
Bank statement loans make sense when you write off significant expenses, run an S-corp that pays you a small W-2, or blend 1099 and other income sources. Most Artesia small business owners with storefronts or inventory end up here.
Some borrowers qualify under both programs but get different loan amounts. We run both scenarios upfront. Whichever puts more income on paper wins.
No, lenders pick one income calculation method per loan. We run both to see which qualifies you for more.
Most lenders don't require CPA letters for 1099 or bank statement loans. Some ask for a basic letter confirming you're self-employed.
1099 loans typically price slightly better because income documentation is cleaner. Rates vary by borrower profile and market conditions.
Underwriters average deposits over the full statement period. Seasonal businesses or project-based income both work fine.
Bank statement loans sometimes work with 12 months of history. 1099 loans typically require two years in the same field.