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in La Mirada, CA
Most self-employed borrowers in La Mirada face a choice between two non-QM paths. The right option depends on how clean your 1099s look versus your actual bank deposits.
Both programs ignore traditional tax returns that show heavy write-offs. But they verify income differently, and that difference changes who qualifies and at what rate.
Understanding which documentation tells your income story better determines approval odds. One path may get you approved while the other gets you declined.
1099 loans use your year-end tax forms to calculate income. Lenders take your gross 1099 earnings, subtract a standard expense ratio, and use that number to qualify you.
This works best when your 1099s show consistent amounts across multiple clients. You need 12-24 months of history, and most lenders average the totals to determine qualifying income.
Credit requirements start at 620, but expect better rates above 680. Down payments run 10-20% depending on your score and loan amount.
The appeal here is simplicity. If your 1099 forms already show strong income, this path requires minimal additional documentation compared to full tax returns.
Bank statement loans calculate income from actual deposits. Lenders review 12-24 months of business or personal statements and apply expense ratios to determine qualifying income.
This program shines when your business runs significant expenses through accounts. Your deposits tell a stronger income story than any tax form shows.
Most programs allow personal bank statements, business statements, or a combination. Personal statements typically use 50% of deposits as income, while business accounts use 75%.
Credit minimums match 1099 programs at 620, with similar down payment requirements. But you get more flexibility in how income gets documented and verified.
The core split is documentation control. 1099 loans lock you into what clients reported to the IRS. Bank statements let you show actual cash flow that may exceed reported earnings.
Rate differences emerge based on risk assessment. Bank statement loans often price slightly higher because income calculation relies more on underwriter interpretation than fixed tax documents.
Consistency matters differently across programs. 1099 loans want stable year-over-year earnings from the same sources. Bank statements care more about average monthly deposits regardless of source.
Processing timelines favor 1099 loans by 5-7 days. Underwriters verify forms against IRS records faster than analyzing two years of transaction history line by line.
Choose 1099 loans when your tax forms already show strong income without heavy write-offs. This path works for consultants, contractors, and freelancers whose 1099s reflect true earnings.
Pick bank statement loans when you write off significant expenses or run money through business accounts. This matters for business owners who show minimal profit on paper but deposit healthy amounts monthly.
Some La Mirada borrowers qualify under both programs but get better numbers with one approach. Run scenarios with actual documentation before choosing your lane.
Either program beats trying to qualify conventionally with tax returns showing aggressive deductions. Rates vary by borrower profile and market conditions, but both open doors closed to standard self-employed applications.
No, you pick one income documentation method per application. Some lenders let you switch approaches if the first doesn't qualify you, but you can't combine them in a single file.
1099 loans typically price 0.25-0.5% lower because income verification is more straightforward. But your specific rate depends on credit score, down payment, and current market conditions.
Bank statement loans sometimes require proof of business registration. 1099 loans care less about formal business structure since you're documenting contractor income through tax forms.
Most lenders want 12-24 months of history. Two years of consistent documentation strengthens your application and often improves rate pricing.
You need at least 12 months of self-employment history for either program. Recent W-2 to 1099 transitions typically don't have enough track record to qualify yet.
Yes, both programs work for investment purchases and refinances. Expect higher down payment requirements and slightly higher rates than primary residence loans.