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in Lynwood, CA
Both 1099 and bank statement loans solve the same problem: proving income when you don't have W-2s. The difference is how each program verifies what you actually make.
Most Lynwood self-employed borrowers qualify for one but not both. Your income structure determines which path works.
1099 loans use your tax forms to calculate qualifying income. Lenders take your 1099 totals, subtract typical business expenses, and underwrite against that net figure.
This works best when you have consistent 1099 income and minimal write-offs. If you claim heavy deductions to reduce taxes, your qualifying income drops proportionally.
You'll need 12-24 months of 1099s, plus tax returns that show stable or growing earnings. Credit minimums typically start at 620, though some lenders prefer 640 or higher.
Bank statement loans skip tax returns entirely. Lenders pull 12 or 24 months of business or personal bank statements and calculate income from deposits.
This path works when you write off significant expenses or your tax returns don't reflect actual cash flow. Underwriters use deposit patterns, not taxable income.
You need consistent deposits without huge month-to-month swings. Rates run higher than 1099 loans because documentation is less standardized.
The split comes down to tax strategy. If you minimize deductions to show higher taxable income, 1099 loans offer better rates and simpler underwriting.
If you maximize write-offs to lower tax liability, bank statements show the real cash flow your returns hide. You'll pay more in rate, but you'll actually qualify.
Processing time differs too. 1099 loans close faster because tax documents are standardized. Bank statement reviews take longer due to manual deposit analysis.
Pull your last two years of tax returns. If your net income after deductions supports the loan amount you need, go 1099. If it falls short, bank statements likely qualify you at a higher number.
Most Lynwood gig workers and contractors lean 1099 if income is steady. Business owners with equipment purchases, home offices, or payroll expenses usually need bank statement programs.
You can apply for both and see which pencils out better. Just work with a broker who has multiple Non-QM lenders, since approval criteria vary widely across bank statement programs.
No. Lenders pick one income calculation method per file. You'll submit both docs for review, but underwriting uses whichever shows stronger qualifying income.
Minimums start around 10-15% for both, but bank statement loans often require 15-20% due to higher risk profile. Rates vary by borrower profile and market conditions.
1099 loans typically price 0.5-1.5% lower because tax returns are standardized documentation. Bank statement loans carry more underwriting uncertainty, which drives higher rates.
Most lenders want 24 months. Some accept 12 months if income is strong and credit is clean, but two years is standard for both programs.
Yes, but it restarts underwriting. If your initial income calc doesn't work, your broker can pivot to the other method with the same lender or shop a new one.