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in Industry, CA
Both 1099 and bank statement loans solve the same problem for Industry borrowers: qualifying without W-2s. The difference is how you prove income.
If you get paid on 1099s with minimal write-offs, those forms work great. If your tax returns show low net income due to deductions, bank statements tell a better story.
Most self-employed borrowers in Industry qualify for one or both. The right choice depends on how you structure your business expenses.
1099 loans let you qualify using your 1099 forms instead of full tax returns. Lenders verify gross income from your forms, not net income after deductions.
You typically need two years of 1099 history in the same field. Credit scores start around 620, and down payments run 10% to 20% depending on the lender.
This works best if your 1099 income is consistent and you don't write off major expenses. Lenders calculate income using your gross 1099 amounts.
Bank statement loans ignore your tax returns completely. Lenders analyze 12 to 24 months of personal or business bank deposits to calculate income.
They look at total deposits, subtract transfers and non-income items, then apply a percentage based on your business type. Most lenders use 50% to 75% of deposits.
Credit requirements start around 620. Down payments range from 10% to 20%, with better rates at higher equity levels.
This option shines when you write off significant expenses that tank your taxable income but maintain strong cash flow.
The core difference is income calculation. 1099 loans use gross income from forms. Bank statement loans use a percentage of your deposits, typically 50-75%.
Documentation is simpler with 1099 loans—just your forms and basic financials. Bank statements require 12-24 months of statements plus explanations for large deposits.
Rates vary by borrower profile and market conditions, but both programs price similarly since they're both non-QM. Your credit score and down payment matter more than the program type.
Industry borrowers with steady 1099 income and low expenses usually get higher qualifying income with 1099 loans. Heavy write-offs flip that advantage to bank statements.
Choose 1099 loans if your tax returns already show strong income. This works when you don't write off much or when your gross 1099 income qualifies you comfortably.
Pick bank statement loans if deductions crush your net income. Business owners with equipment depreciation, home office write-offs, or major operating expenses usually qualify for more this way.
Some Industry borrowers qualify under both and shop for better terms. We run numbers both ways to find which program gets you approved at the lowest rate.
Either option beats trying to qualify through traditional channels with low net income on your tax returns.
No, lenders pick one method per loan. We run both scenarios and use whichever qualifies you for more house or better terms.
Rates are similar since both are non-QM. Your credit score and down payment affect pricing more than the income documentation method.
Yes, most lenders want two years of consistent self-employment history. Some accept one year with strong compensating factors.
Yes, business bank statements work. Some lenders prefer them if you run all income through a business account.
Lenders average your income over 12-24 months. Seasonal fluctuations are fine as long as the trend is stable or growing.