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in Pico Rivera, CA
Both 1099 loans and bank statement loans solve the same problem: proving income when you don't have W-2s. The difference comes down to how you document what you earn and what your CPA reports.
Most self-employed borrowers in Pico Rivera qualify for one but not both. Your tax returns determine which path makes sense.
1099 loans use your actual tax returns to prove income. Lenders average your 1099 earnings over 12-24 months, just like they would for W-2 income.
This works if you write off minimal expenses and show strong net income. If your CPA zeroes out profit to lower taxes, you won't qualify with this approach.
Credit requirements typically start at 620. You need 10-20% down depending on the lender and your income stability.
Bank statement loans ignore tax returns entirely. Lenders calculate income from deposits in your business or personal accounts over 12-24 months.
This works for borrowers who write off most earnings to reduce taxes. The bank sees gross deposits, not what you reported to the IRS.
Expect higher rates than 1099 loans because underwriting carries more risk. Most programs require 10-20% down with 640+ credit.
The core split is tax returns versus bank deposits. If your Schedule C shows $80K net income, use a 1099 loan. If it shows $30K but your account had $120K in deposits, use bank statements.
Rates diverge because of how lenders view risk. 1099 loans price closer to conventional mortgages. Bank statement loans add 0.5-1.5% to rates since income isn't IRS-verified.
Credit standards are similar but bank statement programs often require higher scores. Documentation volume also differs—bank statements mean printing 24-48 months of account activity.
Pull your last two years of tax returns. If your net profit supports the mortgage payment you need, go with a 1099 loan. You'll get better rates and simpler underwriting.
If your returns show minimal profit because of depreciation or business deductions, bank statements are your only option. You'll pay more in rate but actually qualify for the loan amount you need.
Some Pico Rivera buyers blend both—using 1099 income for part of qualifying and adding rental income or other sources. A broker can model both paths with real numbers before you apply.
No. Lenders choose one income calculation method per loan. You either qualify using tax returns or bank deposits, not a mix of both.
1099 loans typically offer rates 0.5-1.5% lower than bank statement loans. Tax-verified income carries less risk for lenders.
Yes. Most lenders want 24 months in the same line of work. Some accept 12 months if income is strong and stable.
Either works. Business accounts are cleaner, but personal accounts qualify if most deposits are business income with clear sourcing.
Lenders average both years. A drop triggers questions about stability. Bank statements might work better if recent deposits stayed strong.