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in San Gabriel, CA
San Gabriel's self-employed buyers face a choice between two non-QM paths. Both skip traditional income verification, but they work differently.
1099 loans use your tax documents. Bank statement loans read your deposits. Which route you take depends on how you run your business.
Most self-employed borrowers qualify for one but not both. The difference comes down to write-offs and cash flow patterns.
1099 loans qualify you based on your reported 1099 income from tax returns. Lenders typically average two years of tax filings to calculate your monthly income.
This works if you don't write off much. Clean tax returns with strong reportable income get you conventional-like rates through non-QM programs.
You need 12-24 months of 1099 history in the same field. Lenders want consistency, not a new gig every quarter.
Credit scores start at 620, but better rates kick in above 680. Down payments run 10-20% depending on your profile.
Bank statement loans skip tax returns entirely. Lenders pull 12 or 24 months of business or personal bank statements and calculate deposits.
They apply an expense ratio, usually 25-50%, to account for business costs. Higher ratios mean lower qualifying income but reflect real operating expenses.
This route saves borrowers who write off aggressively. If your tax returns show $60K but your bank shows $180K in deposits, statements win.
You need 620+ credit and 10-20% down. Rates run higher than 1099 loans because lenders see more risk without tax verification.
The core split: 1099 loans favor low write-offs, bank statements favor high write-offs. If you report most of your income, use 1099. If you shelter most of it, use bank statements.
Rate difference runs 0.5-1.5% between them. 1099 loans price closer to conventional because lenders see verified tax filings. Bank statement loans carry more perceived risk.
Documentation is cleaner with 1099 loans. You hand over tax returns and 1099 forms. Bank statement loans require month-by-month transaction reviews and explanations for large deposits.
Approval speed goes to 1099 loans. Underwriters can read tax returns in hours. Bank statements take days to parse and verify.
Pull your last two years of tax returns. If your adjusted gross income supports the payment, go 1099. If it doesn't, bank statements are your move.
San Gabriel buyers using 1099 income typically work tech consulting, real estate sales, or professional services with light overhead. Bank statement borrowers run construction, retail, restaurants, or cash-heavy businesses.
Run both scenarios with your broker. We calculate qualifying income both ways and show you the rate difference. Sometimes the math surprises borrowers.
Neither option is inferior. They solve different problems. Match your documentation strength to the loan type and you'll close faster.
No. Lenders choose one documentation method per loan. You can't mix tax returns and bank statements to boost qualifying income.
1099 loans price 0.5-1.5% lower because tax returns provide verified income. Bank statement loans carry higher rates due to perceived risk.
Not for 1099 loans. Bank statement loans may require a business license if using business accounts to prove income.
Some bank statement programs allow 12 months. Most 1099 loans need 24 months of tax filings in the same industry.
Bank statement loans work fine with irregular income. Lenders average deposits over 12-24 months to smooth out variability.