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in Rosemead, CA
Both 1099 and bank statement loans serve self-employed borrowers in Rosemead who can't qualify with traditional W-2 documentation. The difference comes down to how you get paid and what records you keep.
If you receive consistent 1099s from clients, one path makes sense. If your income flows through business accounts with varying deposits, the other works better.
1099 loans verify income using your 1099-MISC or 1099-NEC forms from clients. Lenders calculate qualifying income by averaging the past 12-24 months of 1099 earnings, similar to how they treat W-2 income.
This works best for contractors who receive regular 1099s and don't mix personal and business deposits heavily. You need clean documentation showing consistent earnings from identifiable clients.
Bank statement loans analyze deposits in your business or personal accounts over 12-24 months. Lenders calculate income by reviewing total deposits, then deducting transfers and non-income items.
This route handles complex income structures better. If you run revenue through an LLC, take irregular draws, or have mixed deposit types, bank statements tell the full story your 1099s might miss.
The 1099 route requires cleaner records but often closes faster. You hand over tax forms showing client payments, and underwriting moves quickly. Bank statement loans take longer because lenders review every deposit line by line.
Rates vary by borrower profile and market conditions, but bank statement loans typically cost 0.25% to 0.5% more. The trade-off is flexibility—bank statements capture income that never appears on a 1099.
Documentation burden differs sharply. For 1099 loans, you need organized tax records and consistent client relationships. Bank statement loans require detailed account history but work even when your 1099s understate actual income.
Choose 1099 loans if you're a contractor or freelancer with steady client relationships and complete tax records. This path works when your 1099s accurately reflect your earnings and you don't run income through complex business structures.
Go with bank statement loans if you own a business, take irregular draws, or have income that doesn't show up on 1099s. This matters in Rosemead if you're buying rental property while self-employed or running a cash-heavy business.
Most Rosemead borrowers I work with choose based on which records they actually keep. If you file clean 1099s every year, use them. If your CPA tells you to minimize reported income, bank statements show the real picture.
Some lenders allow hybrid documentation, but most require one method or the other. Mixing sources complicates underwriting and usually doesn't improve your qualifying income.
Bank statements often show higher income because they capture deposits your 1099s miss. The difference matters when buying in competitive Rosemead neighborhoods.
Yes, most lenders want 10-20% down for either option. Your credit score and debt ratio affect the minimum more than which income documentation you use.
Both require 12-24 months of history. Lenders prefer 24 months for stronger income trends, but some approve with just 12 months of solid records.
Yes, but it restarts underwriting and delays closing. Choose the right documentation path before you apply to avoid timeline issues.