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in San Dimas, CA
Both programs solve the same problem: getting approved when you don't have W-2s. The difference is how lenders verify your income and what documentation you need.
San Dimas self-employed buyers often qualify for either option. Your choice depends on how clean your 1099s look versus what your bank deposits show.
1099 loans use your actual 1099 forms to document income. Lenders average 12-24 months of 1099 earnings to determine what you qualify for.
This works best when your 1099 income is consistent and you haven't written off most of your earnings. Lenders typically allow some expense deductions but less than what Schedule C filers claim.
Most programs require 10-20% down and credit scores above 620. Rates run 0.5-1.5% higher than conventional loans depending on your profile.
Bank statement loans ignore tax returns completely. Lenders analyze 12 or 24 months of business or personal bank deposits to calculate your income.
The program works for borrowers who write off significant expenses or show inconsistent 1099 income. Underwriters apply expense ratios of 0-50% depending on your business type.
Down payments start at 10% but often require 15-20% for investment properties. Credit requirements are similar to 1099 loans but some lenders accept scores as low as 600.
Documentation is the main split. 1099 loans need your actual forms plus sometimes a CPA letter. Bank statement loans need only statements from your business or personal accounts.
Income calculation matters more than most borrowers realize. If you write off 60% of your revenue on taxes, your 1099s show low net income. Bank statements show the gross deposits before deductions.
Rates vary by borrower profile and market conditions. Bank statement loans typically price 0.25-0.5% higher than 1099 loans because of the added flexibility.
Choose 1099 loans if your forms show steady income and limited deductions. You'll get better pricing and faster approvals when your tax picture looks clean.
Go with bank statement loans if you maximize write-offs or have irregular 1099 patterns. The program ignores what you reported to the IRS and qualifies you on actual cash flow.
Some San Dimas borrowers with multiple income streams use bank statements to combine deposits from several sources. That's harder to document with individual 1099 forms.
Yes, we often pre-qualify borrowers both ways to see which yields higher approval amounts. The documentation requirements don't overlap much so you'd start fresh.
Both allow investment purchases but bank statement loans typically require 20-25% down for non-owner occupied properties. 1099 loans have similar requirements.
1099 loans usually close in 21-30 days since documentation is simpler. Bank statement loans take 30-45 days because underwriters analyze months of deposits.
Some portfolio lenders allow hybrid documentation but most programs require you to choose one method. Mixing sources often complicates underwriting without improving your qualification.
Bank statement loans work better here since they focus on current cash flow. 1099 programs average recent years so a bad year hurts your buying power.