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in Hermosa Beach, CA
Both 1099 loans and bank statement loans solve the same problem: proving income when you don't have W-2s. The difference is how each program calculates what you make.
Hermosa Beach self-employed borrowers often qualify for higher loan amounts with one versus the other. The right choice depends on how your income flows and what expenses you write off.
1099 loans use your year-end 1099 forms to calculate income. Lenders average 12 to 24 months of 1099 earnings, then subtract standard business expenses.
This works best for consultants, contractors, and freelancers with clean 1099 documentation. You need steady contract income without huge monthly swings.
Credit scores start at 620, though 680+ gets better rates. Down payments typically run 10-20% depending on loan amount and credit profile.
Bank statement loans analyze 12 or 24 months of business or personal bank deposits. Lenders calculate average monthly deposits, then apply an expense ratio based on your industry.
This route fits business owners who run most income through their accounts. The expense ratio varies—service businesses get 50% deductions while retail might see 75%.
Same 620 credit minimum as 1099 loans. Down payments also run 10-20%, with higher scores unlocking lower rates. Rates vary by borrower profile and market conditions.
Income calculation makes the biggest difference. 1099 loans use documented contractor payments minus standard expenses. Bank statement loans use all deposits minus industry-specific percentages.
Bank statement loans typically qualify borrowers for higher amounts because they capture income that doesn't generate 1099s. If you have multiple revenue streams or cash deposits, bank statements show more.
Processing timelines differ slightly. 1099 loans move faster if your forms are ready—usually 3-4 weeks to close. Bank statements need more underwriter analysis, adding 5-7 days to the timeline.
Choose 1099 loans if you're a W-9 contractor with consistent documented income. This works for tech consultants, creative freelancers, and medical locum tenens providers.
Pick bank statement loans if you own a business, have multiple income sources, or receive payments that don't generate 1099s. Also better if you write off heavy expenses that reduce your 1099 net income.
Most Hermosa Beach self-employed borrowers qualify under both programs. Run both calculations to see which shows higher income. We compare options across 200+ lenders to find your best fit.
No. Lenders pick one income calculation method per loan. We'll run both scenarios to see which qualifies you for more house.
Yes. Both handle single-family homes, condos, and investment properties. Condo approval depends on the HOA meeting lender warrantability standards.
Rates run similar for both—usually 1-2% above conventional loans. Your credit score and down payment matter more than which non-QM program you choose.
Most lenders want 12 months. Some accept 24 months if it shows stronger income trends. Statements must be consecutive with no gaps.
Lenders average the full 12-24 month period. Seasonal fluctuations are fine as long as the total shows consistent annual earnings.