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in Malibu, CA
Both 1099 loans and bank statement loans serve self-employed borrowers who can't show traditional pay stubs. The difference is how you prove income — through 1099 forms or bank deposits.
Malibu's high property values mean most self-employed buyers need solid income documentation. Choosing the wrong approach can cost you approval or force you into a higher rate.
1099 loans use your 1099 forms from the past two years to calculate qualifying income. Lenders average your gross 1099 income, then apply expense ratios based on your industry.
This works best for contractors and freelancers who receive most income through 1099s with minimal business expenses. You'll need decent credit — typically 620 minimum — and 15-20% down for coastal properties.
The underwriter won't dig through your business bank accounts. They focus on the 1099 forms and your personal credit profile.
Bank statement loans analyze 12 to 24 months of business or personal bank deposits to determine income. Lenders calculate your average monthly deposits, then subtract a percentage for expenses.
This option fits self-employed borrowers who don't receive traditional 1099s — think cash-heavy businesses, digital entrepreneurs, or those mixing multiple income streams. Credit requirements mirror 1099 loans, starting around 620.
Expect to provide every page of your bank statements. Underwriters flag large one-time deposits and irregular income patterns.
The core split is documentation type. 1099 loans need your tax forms. Bank statement loans need your deposit history. Rates run similar — both typically 1-2% above conventional rates.
Income calculation differs significantly. With 1099s, lenders use industry expense ratios that might be 10-30%. Bank statement programs often deduct 25-50% for expenses, which can hurt your buying power.
Bank statement loans give you more control over the income story if your deposits show strong cash flow. 1099 loans work better if your forms reflect solid earnings without complicated business structures.
Choose 1099 loans if you're a contractor or freelancer receiving most income through 1099 forms with low overhead. This path is cleaner when your tax documents already show strong qualifying income.
Go bank statement if you run a cash business, receive income through multiple channels, or your 1099s don't reflect actual cash flow. This matters in Malibu where you need every dollar of income to qualify for higher loan amounts.
Some borrowers qualify under both programs. Run the numbers both ways — the income calculation method that shows higher qualifying income wins.
No. Lenders pick one income calculation method per loan file. You can't blend the approaches, so choose the program that shows your strongest qualifying income.
1099 loans need personal returns to verify the 1099 income reported. Many bank statement programs skip tax returns entirely, using only deposit history.
1099 loans typically close quicker because underwriters have less documentation to review. Bank statement files take longer due to deposit analysis across multiple months.
Most 1099 programs require 24 months. Bank statement loans sometimes accept 12 months if deposits show consistent, strong income.
Both typically start at 620 minimum. Higher scores above 680 unlock better rates and lower down payment requirements.