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in Santa Fe Springs, CA
Both 1099 and bank statement loans serve self-employed borrowers in Santa Fe Springs who can't verify income the traditional way. The right choice depends on how your business is structured and what documentation you can provide.
Most self-employed borrowers here run service businesses, manufacturing operations, or logistics companies. Your income documentation determines which non-QM route makes sense.
1099 loans use your 1099 forms to calculate qualifying income. Lenders typically average 12-24 months of 1099 statements to determine what you can afford.
This works best for independent contractors with steady client relationships. You need clean 1099 documentation from multiple sources and credit scores typically above 640.
Expect down payments starting at 10-15% for purchase loans. Rates run 1-2% higher than conventional mortgages due to the non-QM structure.
Bank statement loans analyze 12-24 months of business or personal bank deposits. Lenders calculate income by averaging your deposits and applying expense ratios.
This option works for any self-employed borrower with consistent deposits. Business owners who write off most expenses on tax returns often qualify for higher amounts here.
Most programs require 10-20% down and credit scores above 620. Lenders typically use a 50% expense ratio, meaning they count half your deposits as qualifying income.
The core difference is documentation. 1099 loans need clean contractor paperwork while bank statement loans just need deposit history.
Bank statement loans usually qualify borrowers for higher amounts because lenders use deposit totals before expense deductions. 1099 loans cap income at what your forms show.
Credit requirements are similar, but bank statement programs offer more flexibility on debt-to-income ratios. Rate differences between the two are minimal, usually within 0.25-0.5%.
Choose 1099 loans if you work as an independent contractor with clear 1099 documentation from established clients. This path is simpler if your paperwork is organized.
Go with bank statement loans if you own a business, have complex income sources, or write off significant expenses. This option works better for borrowers who show lower taxable income but strong cash flow.
Santa Fe Springs borrowers in manufacturing or logistics often prefer bank statement loans due to equipment depreciation and business expenses. Service contractors with minimal overhead lean toward 1099 loans.
No, you pick one documentation method. Some lenders let you supplement 1099s with bank statements to show additional income sources.
Rates are nearly identical, usually within 0.25-0.5%. Your credit score and down payment affect pricing more than which program you choose.
Most lenders require 12-24 months in the same line of work. You don't need two full years if you can show 12 months of consistent income.
Yes, that's the point. Both options skip tax return verification and use alternative income documentation instead.
1099 loans often close slightly faster because the documentation is more straightforward. Bank statement loans need detailed deposit analysis, adding a few days.