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in Norwalk, CA
Both 1099 loans and bank statement loans solve the same problem: getting approved when you don't have W-2s. The difference is how lenders verify your income.
1099 loans use tax forms from clients who paid you. Bank statement loans use deposits flowing through your accounts. Your business structure determines which route works better.
1099 loans verify income through the forms your clients send you at tax time. Lenders add up your 1099s from the past one or two years to calculate qualifying income.
This works well if you have consistent clients issuing clean 1099s. Less effective if you get paid through multiple platforms or take heavy deductions that lower reported income.
Credit requirements typically start at 620. Expect 15-20% down for purchases. Rates run 1-2% above conventional loans depending on your profile.
Bank statement loans ignore tax returns entirely. Underwriters review 12 to 24 months of business or personal bank statements to calculate average monthly deposits.
Lenders apply expense ratios to your deposits—usually 25-50% depending on your business type. A contractor might get 50% expenses assumed while a consultant gets 25%.
Minimum credit scores start around 620-640. Down payments range from 10-20%. Rates run slightly higher than 1099 loans in most cases.
The core split: 1099 loans need clean tax documentation while bank statement loans let you avoid tax returns altogether. If you write off everything to minimize taxes, bank statements show the real cash flow.
Bank statement loans offer more flexibility but cost more. Rates typically run 0.25-0.5% higher than 1099 loans. The trade-off matters if you're choosing between documenting less income on tax forms versus paying the rate premium.
Processing time differs too. 1099 loans close faster when your forms are straightforward. Bank statement loans take longer because underwriters manually review every deposit and flag irregular transactions.
Choose 1099 loans if you have steady clients issuing proper forms and your reported income supports the Norwalk property price. Choose bank statements if aggressive write-offs killed your taxable income but cash flow stays strong.
Contractors, rideshare drivers, and gig workers often need bank statement loans because income comes from apps and platforms that complicate 1099 documentation. Consultants and freelancers with direct client relationships typically qualify easier with 1099 loans.
Run both scenarios with actual numbers. We calculate qualifying income both ways to see which gets you approved for the amount you need. Sometimes the answer surprises borrowers who assumed one route was obvious.
No. Lenders pick one income documentation method per file. Mixing them creates underwriting conflicts about which number to trust.
1099 loans typically price 0.25-0.5% lower than bank statement loans. Rates vary by borrower profile and market conditions.
Both work for bank statement loans. Business accounts often show cleaner income flow but personal accounts qualify if deposits are consistent.
Most lenders want one to two years of 1099s. Two years gives stronger qualification if your income jumped recently.
Yes, if your tax returns eventually show enough documented income to meet conventional guidelines. Many borrowers refinance after adjusting their tax strategy.