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in Bradbury, CA
Both 1099 loans and bank statement loans serve self-employed borrowers, but they verify income differently. Your choice depends on how you run your business and what documentation you keep.
Bradbury's luxury market attracts entrepreneurs and business owners who need flexible income verification. Most don't fit the W-2 mold that traditional lenders require.
1099 loans use your 1099 forms to calculate qualifying income. Lenders typically average the last two years of 1099 income to determine what you can borrow.
You need consistent 1099 income from the same sources. This works best if you're a contractor with regular clients who issue proper tax forms each year.
Credit requirements start around 620, but expect better rates above 680. Most lenders want 15-20% down for primary residences in Bradbury's price range.
Bank statement loans analyze 12-24 months of personal or business bank deposits. Lenders calculate your average monthly income from these statements.
This option works when you have strong cash flow but extensive tax write-offs. Many self-employed borrowers reduce taxable income through deductions, making tax returns look weak.
You'll need 10-20% down depending on credit strength. Rates run higher than conventional loans because lenders see more risk without traditional income docs.
The core split: 1099 loans require formal tax documents while bank statement loans analyze cash flow. If clients don't issue 1099s, bank statements become your only option.
Bank statement loans handle fluctuating income better. Seasonal businesses or those with irregular deposits qualify more easily than through rigid 1099 averaging.
Rates vary by borrower profile and market conditions. Bank statement loans typically cost 0.25-0.75% more than 1099 loans because documentation is less standardized.
Choose 1099 loans if you receive proper tax forms and your income stays consistent. This path offers lower rates and cleaner documentation for underwriters.
Pick bank statement loans if you write off most income or work with clients who pay via wire or check without issuing 1099s. You're trading higher rates for approval flexibility.
Many Bradbury buyers in tech consulting or real estate prefer bank statements. Their businesses show strong cash flow but minimal taxable income after legitimate deductions.
Some lenders allow hybrid approaches, but most require picking one income verification method. Mixing documentation often complicates underwriting without improving your approval odds.
1099 loans close slightly faster because tax forms are standardized. Bank statement underwriting takes longer as analysts review transaction patterns across multiple months.
Yes, lenders want two years of personal returns for both programs. They're checking for red flags even though returns don't determine your qualifying income.
You can combine income sources if self-employment represents at least 25% of total earnings. Some lenders will use your W-2 through standard channels and add 1099 income separately.
Requirements overlap significantly at 10-20% down. Bank statement loans sometimes need higher down payments if your deposits show extreme variability month to month.