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in La Verne, CA
Both 1099 and bank statement loans solve the same problem: getting approved without W-2s. The difference is how you prove income.
1099 loans use your tax forms to calculate qualifying income. Bank statement loans ignore tax returns entirely and use deposit patterns instead.
Most self-employed borrowers in La Verne qualify for one but not both. Your choice depends on how much you write off and how you take payment.
1099 loans qualify you based on the gross income shown on your 1099 forms. Lenders average your last two years of 1099 income to determine how much you can borrow.
This works best if you take most income as reported payments rather than retained business earnings. Consultants, contract workers, and gig economy earners typically fit this profile.
You'll need consistent 1099 income across two years. One strong year and one weak year creates approval issues because lenders average the two.
Rates vary by borrower profile and market conditions. Expect slightly higher rates than conventional loans but better terms than most non-QM options.
Bank statement loans calculate income from 12 or 24 months of business or personal bank deposits. Lenders average monthly deposits and apply a percentage based on your business type.
This option works when you write off significant expenses that lower your taxable income. Your deposits show real cash flow even when tax returns show minimal net income.
You need clean bank statements with consistent deposits. Large one-time transfers or irregular income patterns make underwriting harder.
Rates vary by borrower profile and market conditions. Bank statement loans typically carry higher rates than 1099 loans because underwriting relies on less standardized documentation.
The income calculation is the biggest split. 1099 loans use what you reported to the IRS. Bank statement loans use what actually hit your account.
If you write off 40% of your income, a 1099 loan qualifies you on 60% of gross. A bank statement loan qualifies you on the full deposit amount minus a smaller percentage for business expenses.
Documentation differs significantly. 1099 loans require tax returns and 1099 forms. Bank statement loans need consecutive months of statements and nothing else for income verification.
Credit and down payment requirements are similar for both. Most lenders want 620 minimum credit and 10-20% down depending on loan amount.
Choose 1099 loans if your tax returns show strong net income and you don't write off much. This applies to most contract workers who get paid via 1099 but operate more like employees.
Choose bank statement loans if you write off vehicles, home office, equipment, or other business expenses that reduce taxable income. Your deposits prove you earn more than your tax return shows.
Some borrowers qualify for both. In that case, 1099 loans usually offer better rates and simpler documentation requirements.
We compare your qualifying income under both programs before you apply. Often the difference in loan amount is significant enough to make the choice obvious.
No, lenders use one method or the other. You pick the approach that qualifies you for the highest loan amount based on how you document income.
1099 loans typically beat bank statement loans on rate by 0.25-0.75%. Both beat hard money but cost more than conventional financing.
Yes for 1099 loans. Bank statement loans sometimes work with 12 months if deposits are strong and consistent throughout that period.
Lenders average both years, so a drop hurts your qualifying income. Bank statements avoid this if your deposits stayed steady despite lower reported income.
Yes, but it restarts underwriting. We determine the best fit upfront to avoid delays and duplicate documentation requests.