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in Glendora, CA
Both loan types serve self-employed borrowers in Glendora who can't document income the traditional way. The right choice depends on how your business reports income and what creates the cleanest approval path.
1099 loans work when your tax returns tell the story you want lenders to see. Bank statement loans work when your deposits show stronger income than your write-offs allow you to claim on returns.
Most self-employed borrowers in Los Angeles County qualify for one but not both. Your CPA's tax strategy over the past two years usually determines which option makes sense.
1099 loans use your tax returns to calculate qualifying income. Lenders average your net self-employment income from the past two years of 1099 forms and Schedule Cs.
This works well if you take minimal write-offs and show strong net income on paper. It falls apart if aggressive deductions drop your taxable income below what you actually bring home.
Credit requirements typically start at 620. Down payments range from 10% to 20% depending on the lender and your debt-to-income ratio after calculating qualifying income.
Bank statement loans calculate income from 12 to 24 months of business or personal bank deposits. Lenders apply an expense factor—usually 25% to 50%—then average what remains as qualifying income.
This program rescues borrowers whose tax returns show weak income due to depreciation, business expenses, or other legitimate write-offs. Your deposits tell the real earnings story.
Credit typically needs to hit 640 minimum. Down payments run 10% to 20%, though some lenders want 15% or more if your bank statements show inconsistent deposits.
Income calculation separates these programs completely. 1099 loans reward tax efficiency—showing strong net income on returns. Bank statement loans reward business efficiency—showing strong cash flow through accounts.
Documentation differs sharply. 1099 loans need two years of personal and business tax returns plus year-to-date profit and loss statements. Bank statement loans need 12 to 24 months of statements with no tax returns required.
Rates vary by borrower profile and market conditions, but bank statement loans typically price 0.25% to 0.75% higher than 1099 loans because deposit analysis carries more underwriting risk than tax transcripts.
The Glendora market includes plenty of consultants, contractors, and small business owners who fit both profiles. Your 2022 and 2023 tax returns determine which path closes faster.
Choose 1099 loans if your tax returns from the past two years show solid net income that qualifies you for the home you want. This path offers cleaner underwriting and typically better pricing.
Choose bank statement loans if write-offs crushed your taxable income but your deposits prove you earn enough to qualify. Expect to provide 12 to 24 months of statements showing consistent business activity.
Run both scenarios before deciding. Some Glendora borrowers discover they qualify under 1099 guidelines after assuming only bank statements would work. Others find deposits reveal stronger income than tax returns suggested.
Credit scores, down payment size, and debt ratios matter for both programs. Neither option works miracles—you still need verifiable income and reasonable monthly obligations relative to what you earn.
No, lenders use one calculation method per file. You choose 1099 or bank statement approach based on which shows stronger qualifying income.
1099 loans typically close faster because tax transcripts verify income cleanly. Bank statement loans need more underwriting time to analyze deposit patterns.
Yes, both allow investment property purchases. Expect higher rates and down payments—usually 20% to 25% minimum for non-owner occupied deals.
Lenders average the two most recent years. Big swings raise questions but don't disqualify you if the average supports your loan amount.
You can pivot early in underwriting, but switching restarts documentation review. Choose the right path before submitting to avoid delays.