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in Bell, CA
Both 1099 and bank statement loans serve self-employed borrowers in Bell who can't show traditional W-2 income. The difference is how each program calculates what you earn.
Most independent contractors have a choice between these two non-QM options. Your tax returns and banking habits determine which route gets you approved faster.
Neither program requires traditional pay stubs or employer verification letters. Both use alternative documentation to prove you can afford the loan.
1099 loans use your actual 1099 forms to calculate income. Lenders typically average your 1099 income over 12 or 24 months to determine what you qualify for.
This works best if you have consistent contractor income reported on clean 1099s. You'll need less documentation than a full tax return analysis requires.
Most lenders want 12-24 months of 1099 history. Your debt-to-income ratio gets calculated using the gross income shown on those forms with minimal deductions.
Bank statement loans analyze 12 or 24 months of personal or business bank deposits. Lenders calculate your monthly income by averaging those deposits.
This option works when your 1099s don't tell the full story or you receive income through multiple channels. Business owners who write off significant expenses often qualify for more with bank statements.
You can use personal accounts, business accounts, or both. Lenders apply a percentage factor to deposits to account for business expenses, typically 50-75% depending on your industry.
The income calculation method separates these programs. 1099 loans use your reported contractor income directly. Bank statement loans look at actual cash flow through your accounts.
Bank statement programs usually qualify you for higher amounts if you write off major business expenses. 1099 loans work faster when your forms show strong, consistent income.
Documentation requirements differ significantly. Bank statements require every page of 12-24 months of statements. 1099 loans need just the actual 1099 forms and possibly a profit and loss statement.
Rates vary by borrower profile and market conditions. Both programs typically price similarly, though bank statement loans may carry slightly higher rates due to increased underwriting complexity.
Choose 1099 loans if your forms accurately reflect your income and you don't have major business write-offs. This route closes faster and requires less documentation to review.
Go with bank statement loans if you're a business owner with significant expenses or receive income from multiple sources. Your actual deposits often show higher earning power than 1099s alone.
Many Bell self-employed borrowers benefit from applying both ways. We can run your numbers through each program and show you which qualification looks stronger.
The wrong choice costs you either approval likelihood or loan amount. Most brokers only offer one program, but we have access to both and price them competitively.
No, you pick one income documentation method per loan application. Some lenders want to see bank statements even on 1099 loans, but income calculation uses only one source.
Rates are comparable between both programs and depend more on your credit score, down payment, and property type. Neither consistently beats the other on pricing.
Most lenders want 12-24 months of income history in your current line of work. Two full years is common but some approve with 12 months of strong documentation.
Most non-QM lenders require 620 minimum credit score for both programs. Stronger rates and terms kick in above 680.
Yes, both 1099 and bank statement loans work for investment properties. Expect higher rates and down payment requirements than primary residence purchases.
Loan amounts go up to $3-4 million with most non-QM lenders. Your actual qualification depends on which method shows higher verifiable income.