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in Lawndale, CA
Most self-employed borrowers in Lawndale think they need tax returns to qualify for a mortgage. That's wrong. Both 1099 loans and bank statement loans skip traditional tax return verification entirely.
The difference comes down to how you receive income and what documentation you can provide cleanly. One uses your 1099 forms directly. The other pulls income straight from deposits.
1099 loans use your contractor income forms to calculate qualifying income. If you get multiple 1099s from clients, lenders add them up and apply standard debt ratios.
This works best when your 1099 income is substantial and consistent across 12-24 months. Lenders typically require 620+ credit and 15-20% down for Lawndale purchases.
The advantage is simplicity. Your 1099s already exist. You're not reconstructing income from deposits or explaining every transaction that crosses your accounts.
Bank statement loans calculate income from 12-24 months of business or personal bank statements. Lenders apply a percentage to your deposits to determine qualifying income.
This works for borrowers who receive payments via check, wire, ACH, or cash deposits. You don't need formal 1099s from every client. Your bank activity tells the income story.
Rates vary by borrower profile and market conditions. Expect 15-25% down depending on credit strength and how clean your bank statements look.
The core split is documentation style. 1099 loans need formal income reporting from clients. Bank statement loans work when income arrives informally or from multiple small sources.
Bank statement loans handle messy situations better. Mixed business and personal deposits, cash income, or clients who don't issue 1099s all qualify under bank statement review.
Pricing typically favors 1099 loans by 0.25-0.50% because the income documentation is cleaner. But that edge disappears if you're writing off most of your 1099 income on tax returns anyway.
Choose 1099 loans if you're a consultant or contractor who receives proper 1099-NEC or 1099-MISC forms from most clients. Your income is already documented formally.
Choose bank statement loans if you run a small business with varied payment methods, receive cash income, or work with clients who don't issue 1099s reliably.
In Lawndale, where many borrowers juggle multiple income streams, bank statement loans usually win. They capture your full earning power without relying on client paperwork.
Yes. Some lenders combine both to maximize qualifying income. This works well when you have formal 1099 income plus additional cash flow.
1099 loans close slightly faster because documentation is more standardized. Bank statement loans need more underwriter review of deposits.
Either works. Business statements are cleaner if you keep finances separated. Personal statements work when income flows through one account.
Bank statement loans handle income fluctuations better. Lenders average deposits over 12-24 months instead of requiring year-over-year consistency.
Yes. Both 1099 and bank statement loans work for Lawndale refinances. Same income documentation applies as purchase loans.