Loading
in Diamond Bar, CA
Diamond Bar's entrepreneurial community includes consultants, tech contractors, and business owners who don't fit traditional W-2 lending boxes. Both 1099 and bank statement loans solve the self-employment income problem, but they approach documentation differently.
Choosing between these programs depends on how your income hits your accounts. One uses tax forms, the other bypasses them entirely and looks at deposits.
Most self-employed borrowers qualify for both programs but get better terms with one over the other. Your tax strategy determines which path makes sense.
1099 loans verify income using your 1099 forms and tax returns from the past two years. Lenders calculate qualifying income from what you reported to the IRS, not what you actually deposited.
This works well if you claim most of your income and don't write off everything. You need clean tax returns showing consistent earnings without major year-over-year drops.
Expect credit minimums around 620-640 and down payments starting at 10-15%. The documentation is straightforward if your returns already show strong income.
Bank statement loans skip tax returns entirely. Lenders analyze 12-24 months of business or personal bank statements to calculate income from deposits.
This program rescues borrowers who write off heavy expenses for tax benefits but actually make strong money. Lenders apply expense ratios to gross deposits to estimate true income.
Credit requirements typically start at 640-660. Down payments often run 15-20% because lenders price for the documentation risk.
Processing takes longer since underwriters manually review every statement. But if your tax returns show low income while your bank shows healthy cash flow, this is your path.
The core split: 1099 loans trust what you told the IRS, bank statement loans trust what hit your account. If those numbers match, go 1099 for simpler processing and often better rates.
Bank statement loans cost more upfront and carry slightly higher rates because lenders assume more risk without tax verification. You're trading rate for flexibility.
Processing speed favors 1099 loans. Two years of returns beat manually reviewing 24 months of transactions. Bank statement underwriting adds 1-2 weeks to typical timelines.
Down payment requirements overlap but bank statement programs lean heavier. Few 1099 programs go below 10% down; bank statement lenders rarely go below 15%.
Run this test: compare your gross 1099 income from last year's tax return to your actual deposits. If they're within 20%, use 1099 loans for better pricing.
If your tax returns show $80k but you deposited $180k because of aggressive write-offs, bank statements will qualify you for much more house. The rate premium pays for itself in buying power.
Diamond Bar borrowers in professional services, consulting, or tech contracting often have clean 1099 income and should default to 1099 programs. Business owners with inventory, equipment purchases, or real estate holdings typically need bank statement flexibility.
Consider how long you've been self-employed too. Under two years? Bank statements might be your only option since 1099 loans require two full years of tax history.
Yes, and you should. If you have two years of tax returns and bank statements, run both scenarios. Whichever shows higher qualifying income and better pricing wins.
Both programs handle conforming and jumbo amounts. Bank statement loans max out around $3-4M depending on the lender, 1099 programs similar.
1099 loans close faster because underwriters review tax forms, not months of transactions. Bank statement loans add 7-14 days to standard timelines.
Bank statement lenders average deposits over 12-24 months to smooth irregularity. Large one-time deposits get excluded from income calculations.
Yes, most bank statement programs accept business accounts. Some lenders prefer business statements for sole proprietors and single-member LLCs.
No. 1099 loans start around 620, bank statements around 640. Higher credit gets better rates but neither requires perfect scores.