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in Santa Clarita, CA
Self-employed borrowers in Santa Clarita face a choice: qualify using 1099s or bank statements. Both are non-QM loans built for people who don't fit traditional income boxes.
The right option depends on how you run your business and what shows up on paper. Some contractors look stronger on 1099s. Others need bank statements to show their real cash flow.
Most Santa Clarita self-employed buyers fall into one of these camps. Pick the wrong documentation route and you'll either get denied or leave money on the table with a worse rate.
1099 loans use your tax forms to prove income. Lenders take your gross 1099 earnings, subtract business expenses from Schedule C, then average 12-24 months.
This works if you claim minimal write-offs. If you deduct heavily for tax purposes, your qualifying income shrinks. Many self-employed borrowers write off so much they can't show enough income on paper.
Rates typically run 0.25-0.75% lower than bank statement loans because 1099s are IRS-verified documents. Lenders view them as more reliable than bank deposits.
Bank statement loans skip tax returns entirely. Lenders analyze 12-24 months of business or personal bank deposits to calculate income.
They apply an expense factor—usually 25-50%—to account for business costs not shown in deposits. A contractor depositing $20,000 monthly might qualify on $10,000-$15,000 after the haircut.
This works when you write off everything possible for taxes but still show strong deposits. You prove income through cash flow, not what you reported to the IRS.
Local decision guide
Use this comparison to weigh 1099 Loans and Bank Statement Loans through local payment fit, eligibility, documentation, and timing before choosing a path in Santa Clarita.
Self-employed borrowers in Santa Clarita face a choice: qualify using 1099s or bank statements. Both are non-QM loans built for people who don't fit traditional income boxes.
The right option depends on how you run your business and what shows up on paper. Some contractors look stronger on 1099s. Others need bank statements to show their real cash flow.
Most Santa Clarita self-employed buyers fall into one of these camps. Pick the wrong documentation route and you'll either get denied or leave money on the table with a worse rate.
The core split: 1099 loans follow your tax returns while bank statement loans follow your deposits. If those two numbers match, pick 1099 for better pricing.
If you show $80,000 on taxes but deposit $200,000, bank statements will qualify you for a bigger loan. You'll pay 0.5-1% more in rate but gain purchasing power.
Credit score matters more with bank statements. Most lenders want 680+ for bank statement loans versus 620-640 for 1099 programs. Documentation is easier with 1099s—just tax returns and forms versus months of statement analysis.
Run both calculations before choosing. Pull your last two years of 1099s and Schedule Cs. Average your net income. Then total your bank deposits and apply a 35% expense factor.
Whichever number is higher determines your path. If you're within 10% either way, go with 1099 for the rate savings. If bank statements show 30%+ more income, the higher rate is worth it.
Some Santa Clarita self-employed buyers combine both—using 1099s for one property and switching to bank statements when they need to stretch for a bigger purchase. Your broker should run scenarios both ways before you commit.
Yes, but it restarts underwriting. Decide upfront which documentation shows your income best to avoid delays and multiple credit pulls.
Typically 15-20% minimum for both. Bank statement loans sometimes require 20% when 1099 loans allow 15% at the same credit score.
1099 loans usually close 3-5 days faster. Bank statement underwriting takes longer because lenders analyze every deposit pattern.
Yes. Most lenders accept either or a combination. Business accounts often show cleaner income flow without personal expenses mixed in.
Lenders average the periods provided. A down year hurts you more with 1099s than bank statements if your deposits stayed consistent.
Yes. Rates vary by borrower profile and market conditions. Credit score, down payment, and property type all affect final pricing on both programs.