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in Palmdale, CA
Palmdale self-employed borrowers have two strong non-QM paths to financing. Both skip traditional W-2 documentation, but they verify income differently.
1099 loans work for contractors with clear tax reporting. Bank statement loans suit borrowers who write off most income or run cash-heavy businesses.
The right choice depends on how you structure your business. One option might show stronger qualifying income than the other.
1099 loans use your tax forms to verify income. Lenders pull gross receipts from your 1099-MISC or 1099-NEC documents, then subtract business expenses you reported.
Most programs need two years of 1099 income from the same line of work. Credit requirements typically start at 620, with 10-20% down depending on your profile.
This route works best when your tax returns show decent net income. If you write off aggressively, your qualifying income shrinks fast.
Bank statement loans analyze 12 to 24 months of business or personal bank deposits. Lenders calculate average monthly deposits, then apply a percentage based on your business type.
No tax returns required for income verification. This helps borrowers who maximize write-offs or run cash businesses with thin reported profits.
Credit minimums usually sit at 620-640. Down payment needs range from 10-25% depending on credit strength and debt-to-income ratio.
The income calculation splits these programs apart. 1099 loans look at what you reported to the IRS after expenses. Bank statement loans look at gross deposits before any deductions.
Borrowers who write off 60-70% of income typically qualify for more with bank statements. Those with clean 1099s showing strong net income often get better rates on 1099 programs.
Documentation burden differs too. Bank statements need consistent deposits across many months. 1099 loans need organized tax filing history and business continuity proof.
Rates vary by borrower profile and market conditions. Generally, 1099 loans price closer to conventional when your profile is clean. Bank statement loans carry higher rates due to reduced documentation.
Run the numbers both ways. Pull your last two years of 1099s and 12-24 months of bank statements. Calculate qualifying income under each method.
Choose 1099 loans when your tax returns show solid net profit and you want tighter pricing. Pick bank statements when aggressive write-offs crushed your taxable income but deposits stayed strong.
Some Palmdale contractors blend income sources—1099s plus side business cash flow. In those cases, bank statements often capture total earning power better than tax forms alone.
No, lenders pick one income verification method per loan. They won't blend calculations, but you can choose whichever shows stronger qualifying income.
1099 loans typically price 0.25-0.75% lower than bank statement programs. Rates vary by borrower profile and market conditions based on credit and down payment strength.
Yes, most lenders want 24 months in the same line of work. Some bank statement programs accept 12 months with strong deposits and high credit scores.
Lenders average the two years but flag declining income. If last year dipped more than 20%, you'll need a written explanation and proof of contract continuity.
Yes, but business accounts work better. Personal statements need clear income separation—lenders will exclude transfers, gifts, and non-business deposits from the calculation.