Loading
in Maywood, CA
Self-employed borrowers in Maywood face the same challenge: proving income without W-2s. Both 1099 loans and bank statement loans solve this problem, but they work differently.
Your choice depends on how you receive income and what documentation you can provide. One uses tax forms, the other uses your actual deposits.
1099 loans use your 1099 forms from the past two years to calculate qualifying income. Lenders average your 1099 earnings, then apply underwriting ratios to determine how much you can borrow.
This works best if you're a contractor getting consistent 1099s from a few clients. The income pattern needs to be stable or increasing. Most lenders require two years in the same line of work.
Credit requirements typically start at 620, though stronger profiles get better rates. Down payments range from 10% to 20% depending on property type and income strength.
Bank statement loans analyze 12 to 24 months of business or personal bank deposits. Lenders look at what actually hits your account, not what you report on taxes.
This matters if you write off major expenses that lower your taxable income. A Maywood business owner might show $80K on their tax return but deposit $140K. Bank statement loans qualify you on the deposits.
These loans typically require 10% to 20% down and credit scores above 600. Rates vary by borrower profile and market conditions, but expect higher pricing than conventional loans.
The main split is documentation type. 1099 loans need your tax forms and 1099s. Bank statement loans need your monthly statements showing deposits. Both require two years of self-employment history.
Income calculation differs sharply. 1099 loans use reported income after expenses. Bank statement loans use gross deposits, then apply a percentage (usually 50-75%) to account for business costs.
If you maximize deductions and show low taxable income, bank statements will qualify you for more. If your 1099 income is clean and steady, that route is simpler and often cheaper.
Choose 1099 loans if you're a contractor or freelancer who gets consistent 1099 forms and doesn't write off major expenses. The documentation is cleaner and pricing is often better.
Choose bank statement loans if you own a business, take heavy deductions, or have income that doesn't show up well on tax returns. This route qualifies you on cash flow, not taxable income.
Many Maywood self-employed borrowers qualify for both. Run numbers both ways. The bank statement option usually wins if your deposits are significantly higher than your reported income.
No, lenders use one income documentation method per loan. You pick the approach that shows your income most favorably.
Rates vary by borrower profile and market conditions. 1099 loans often price slightly better if your income is clean and consistent.
Yes, both typically require at least two years in business. Some lenders accept one year with strong compensating factors.
Lenders average the two years. Declining income can hurt your approval or require larger down payments.
Yes, if you run deposits through a business account. Personal bank statements work too if that's where your income lands.