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in Hermosa Beach, CA
Hermosa Beach buyers with self-employment income face a choice between 1099 loans and bank statement loans. Both programs let you prove income without W-2s. The real difference lies in documentation depth and approval speed.
Self-employed professionals here—contractors, consultants, freelancers—often earn solid incomes but lack traditional payroll records. These two paths handle that differently. One digs into tax returns; the other focuses on actual deposits.
1099 loans ask for your last two years of tax returns. They average your net income across those years. This approach works well if your business is stable and your returns show consistent profit.
Lenders typically want to see a 2-year history of self-employment. They'll verify your returns with the IRS. Down payments usually start at 10% to 15% for qualified borrowers.
Bank statement loans count deposits directly from your business account. No tax returns required. This path suits freelancers and contractors whose income varies month to month.
Lenders review 12 to 24 months of bank statements. They average deposits to calculate qualifying income. Down payments often run 15% to 20% since the lender takes on more documentation risk.
1099 loans lean on IRS-verified tax returns; bank statement loans skip that step entirely. If your returns don't reflect your actual cash flow, bank statements may show higher qualifying income. That gap matters in Hermosa Beach's price range.
Approval speed favors bank statement loans. No IRS verification means faster closing. 1099 loans take longer but work better if your tax returns are clean and your income is steady.
Pick 1099 loans if your tax returns accurately reflect your business income. You've filed consistently for two years. Your net profit is solid. You can put 10-15% down.
Bank statement loans fit contractors and freelancers whose deposits exceed their tax-reported income. You have 12-24 months of clean bank statements. You're ready to put 15-20% down. Your income varies seasonally but averages well.
Yes. 1099 loans require two years of filed tax returns. The lender verifies them with the IRS. If you haven't filed yet, bank statement loans are your path instead.
Yes. Bank statement loans skip tax returns entirely. They use 12-24 months of business bank statements to calculate your income. No IRS verification needed.
Bank statement loans typically close faster. No IRS verification step means fewer delays. 1099 loans take longer because the lender must verify your returns with the IRS.
1099 loans often start at 10-15% down. Bank statement loans usually require 15-20% down. The difference reflects the lender's documentation risk.
Bank statement loans work better for variable income. They average your deposits over 12-24 months. 1099 loans average your tax-reported net income, which may be lower if you have deductions.