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in Duarte, CA
Duarte's self-employed borrowers face a choice between two non-QM options. Both skip traditional W-2 verification, but they use completely different methods to prove income.
1099 loans rely on tax forms from your clients. Bank statement loans analyze deposits flowing through your accounts. The right choice depends on how you run your business and structure your income.
Most brokers see bank statement loans close faster in Duarte. But 1099 loans often land better rates if your client mix is stable and your tax returns look clean.
1099 loans verify income through forms your clients send the IRS. Lenders total your 1099-NEC and 1099-MISC forms, then calculate qualifying income. This works best for contractors with steady client relationships.
You need two years of 1099 history with similar or growing income. Lenders also review tax returns to confirm the 1099 income you reported. Credit requirements typically start at 620, though some lenders want 640.
Rates on 1099 loans usually beat bank statement programs by 0.25% to 0.75%. Down payment minimums range from 10% to 15% depending on credit score and property type in Duarte.
Bank statement loans analyze 12 or 24 months of business or personal bank statements. Lenders track deposits, subtract business expenses using standard percentages, then calculate monthly income. This works for borrowers with complex income streams.
You avoid the tax return scrutiny that trips up many self-employed buyers. Lenders focus on cash flow patterns instead of what you wrote off. Most programs accept 12 months of statements, though 24 months can improve your qualifying amount.
Credit minimums start at 620 for most Duarte deals. Down payments range from 10% to 20% based on deposit consistency and property type. Rates run higher than 1099 loans but approval odds are better for newer businesses.
The income calculation method separates these programs completely. 1099 loans add up what clients paid you per IRS records. Bank statement loans analyze actual deposits minus estimated expenses, usually 25% to 50% depending on industry.
Tax returns matter more for 1099 loans since lenders verify you reported the income. Bank statement programs care about cash flow patterns, not what you wrote off. This makes bank statements better for borrowers who maximize deductions.
Rate pricing favors 1099 loans when your profile is strong. Expect rates 0.5% to 0.75% lower than bank statement options. But bank statement loans approve borrowers who can't document stable 1099 history or show inconsistent tax filings.
Processing time differs too. 1099 loans move faster when your client forms are organized and match your returns. Bank statement loans take longer because underwriters manually review every deposit and flag irregular transactions.
Choose 1099 loans if you receive most income through client contracts documented on tax forms. You need two years of similar earnings and tax returns that match your 1099 totals. This path delivers better rates and faster approval in Duarte.
Pick bank statement loans if your income varies month to month or you maximize tax deductions. This works better for business owners with multiple revenue streams or those who've been self-employed less than two years. You'll pay higher rates but avoid tax return issues.
Most Duarte contractors with W-9 client relationships qualify for 1099 loans. Business owners with retail locations, e-commerce income, or cash-heavy operations fit bank statement programs better. Your expense structure matters more than your industry.
No, lenders use one method or the other. Some programs blend W-2 and 1099 income, but you can't mix bank statement verification with 1099 documentation on the same application.
1099 loans need fewer documents if your client forms are organized. Bank statement loans require more pages but skip tax return deep dives that often create problems.
Yes, both approve investment properties. Expect 20-25% down minimums and slightly higher rates compared to primary residence purchases in Los Angeles County.
Both typically require 620 minimum credit. Some 1099 lenders want 640, while bank statement programs occasionally approve 600 scores with larger down payments.
On a typical Duarte purchase, the 0.5% rate gap means about $150-200 more per month with bank statements versus 1099 loans. Rates vary by borrower profile and market conditions.