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in Bellflower, CA
Bellflower self-employed borrowers have two solid paths to approval. Both skip W-2 verification, but they prove income differently.
1099 loans rely on tax returns showing your contract income. Bank statement loans use deposit patterns from your business accounts.
The right choice depends on how you structure your business and what your tax returns actually show. Most self-employed borrowers benefit from one over the other.
1099 loans use your tax returns to verify income from contract work. Lenders calculate qualifying income directly from your 1099 forms and Schedule C.
You need two years of 1099 history in the same field. Credit scores start at 620, down payments at 10-15% depending on the lender.
This option works best when your tax returns show strong net income. If you write off most of your earnings, your qualifying income drops accordingly.
Bank statement loans analyze 12-24 months of business or personal account deposits. Lenders calculate income from average monthly inflows, applying expense ratios.
No tax returns required for income verification. This matters when you maximize write-offs and show minimal taxable income.
You need consistent deposits and clean banking history. Lenders want to see regular business activity without NSF fees or negative balances.
Rates run 0.5-1.5% higher than conforming loans. The premium buys flexibility around tax planning.
Documentation is the main split. 1099 loans need filed returns showing two years of contract income. Bank statement loans skip tax returns entirely.
Income calculation differs dramatically. 1099 loans use your net profit after business expenses. Bank statement loans use gross deposits minus an expense factor.
This means bank statement loans typically show higher qualifying income for borrowers who write off aggressively. You keep more profit off your tax return but still prove capacity to lenders.
Rates favor 1099 loans by 0.5-1% when you qualify for both. The trade-off is losing tax deductions to show stronger reported income.
Choose 1099 loans if your tax returns already show solid net income. You get better rates and the approval process runs faster with clear documentation.
Pick bank statement loans when you maximize deductions and show minimal taxable income. This applies to most Bellflower contractors and small business owners.
Bank statement loans also work for borrowers with multiple income streams that complicate tax returns. One checking account tells a clearer story than Schedule C plus side gigs.
Either option beats trying to restructure your business taxes for conventional approval. Self-employed borrowers in Bellflower rarely need to sacrifice tax strategy to buy property.
Yes, if initial 1099 review shows weak qualifying income. We resubmit using bank statements without restarting underwriting from scratch.
Personal accounts work if they show clear business deposits. Business accounts are cleaner but not required for approval.
1099 loans close 3-5 days quicker on average. Bank statement underwriting takes longer due to transaction analysis requirements.
Some lenders allow hybrid documentation. This helps when you have both W-2 and self-employment income to maximize qualification.
Yes, both support investment purchases and refinances. Down payment requirements increase to 20-25% for non-owner occupied properties.