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in South Gate, CA
South Gate's self-employed borrowers face a choice: qualify with 1099 forms or bank statements. Both skip traditional W-2 verification, but they pull income proof from different places.
Your choice depends on how you receive income and what your books look like. Contractors with clean 1099s take one path. Business owners with expenses that eat their taxable income take another.
1099 loans verify income through your tax returns, just like conventional loans. The difference: lenders focus on 1099 income specifically, not just W-2 wages.
You'll need two years of returns showing consistent 1099 earnings. Lenders average your income across 24 months. If your 1099 income dropped year over year, that creates approval problems.
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Bank statement loans ignore your tax returns entirely. Lenders pull 12 or 24 months of business or personal bank statements and calculate income from deposits.
This works for borrowers who write off heavy expenses. Your deposits might show $20,000 monthly even if your taxable income looks like $5,000. Lenders use deposit totals, not Schedule C net.
You'll pay higher rates than QM loans. But if your tax returns show minimal income while your bank shows strong cash flow, statements beat 1099s every time.
The income calculation splits these programs apart. 1099 loans use what you reported to the IRS. Bank statement loans use what hit your account.
Documentation differs too. 1099 borrowers hand over tax returns. Bank statement borrowers provide monthly statements and sometimes a CPA letter. Underwriting timelines run similar, but bank statement reviews take longer.
Rates on bank statement loans typically run 0.5% to 1% higher than 1099 loans. You're paying for flexibility. Down payment requirements stay similar: expect 10% to 20% down for both programs in South Gate.
Choose 1099 loans if your tax returns already show strong income. Contractors who report most earnings and don't max out write-offs qualify easier this way. Rates stay lower.
Pick bank statement loans when your returns look weak but your accounts look strong. South Gate business owners writing off vehicles, home offices, and equipment fit here. Your deposits tell the real income story.
Run the math both ways. If your Schedule C shows $80,000 net, use 1099. If it shows $40,000 but your deposits average $12,000 monthly, bank statements win. Your broker should calculate qualifying income under both scenarios.
No, lenders pick one income method per loan. You can't combine tax return income with bank statement income calculations. Choose the method showing higher qualifying income.
Yes, both handle 1-4 unit properties. Rental income from additional units can strengthen your application. Lenders verify rental deposits through statements or lease agreements.
1099 loans typically close slightly faster because tax returns process quicker than 24 months of statements. Budget 30-45 days for either program with a responsive borrower.
You can, but it restarts underwriting. If initial income calculations fall short, ask your broker to resubmit using bank statements. Expect delays when switching documentation methods.
Both typically require 620 minimum. Higher scores unlock better rates. Expect 680+ for competitive pricing on either program.