Loading
in Santa Monica, CA
Santa Monica's self-employed community—from creatives to tech consultants—faces a basic financing decision: prove income with 1099s or bank deposits. Both work for non-W-2 earners, but they measure your earnings differently.
If you have clean 1099 forms showing steady income, that's one path. If your business runs cash through accounts with irregular deposits, bank statements tell a clearer story. We shop both across 200+ lenders to find your best rate.
1099 loans use your tax forms to calculate qualifying income. Lenders average your 1099 earnings over 12-24 months, often applying a standard expense ratio. This works well if you report most of your income and don't write off everything.
You'll need 1-2 years of 1099s, personal tax returns, and decent credit—usually 620 minimum. Rates run 0.5-1.5% above conventional because these are non-QM products. Down payments typically start at 10-15%.
Bank statement loans skip tax returns entirely. Lenders analyze 12 or 24 months of business or personal bank deposits to calculate income. They apply expense ratios—often 25-50%—based on your business type and deposit patterns.
This route works when you maximize tax deductions and show lower taxable income than actual cash flow. You need consistent deposits, 10-20% down, and credit around 620-640. Rates typically run 1-2% higher than conventional loans.
The core split: 1099 loans rely on what you reported to the IRS, while bank statement loans care about what actually hit your accounts. If you write off 60% of your revenue, your 1099 qualifying income gets hammered. Bank statements catch that missing cash flow.
Documentation differs sharply. 1099 loans need tax returns and forms from clients. Bank statement loans just need 12-24 months of statements—personal, business, or both. Processing time is similar, but bank statement underwriting takes more manual review of deposit patterns.
Choose 1099 loans if your tax returns show strong income without aggressive write-offs. W-2/1099 hybrid earners often qualify faster this way. It's cleaner documentation and slightly better pricing when your reported income supports the loan amount.
Go with bank statement loans if you're fully self-employed with significant business expenses. Santa Monica business owners in creative fields, consulting, or retail often show better income this way. We'll calculate both scenarios to see which yields a higher qualifying amount.
No. Lenders pick one income calculation method per file. We run both scenarios upfront to see which qualifies you for more house.
Not always. Many lenders accept personal accounts if deposits clearly show business income. Mixing both accounts can work too.
1099 loans often price 0.25-0.5% lower because documentation is more standardized. Rates vary by borrower profile and market conditions.
Most lenders want 12-24 months. Two years of consistent income strengthens your file and sometimes unlocks better pricing.
You typically need 12-24 months of self-employment history. Shorter timelines work occasionally if you stayed in the same industry.