Loading
in West Covina, CA
Both 1099 loans and bank statement loans serve self-employed borrowers in West Covina who can't document income through W-2s. The key difference is how you prove what you earn — tax returns versus deposit patterns.
Most self-employed buyers qualify for one but not both. Your business structure and how you pay yourself determines which route works best for your situation.
1099 loans verify income using your tax returns and 1099 forms from clients. Lenders calculate qualifying income from your adjusted gross income, usually averaging two years of returns.
This works well if you claim minimal deductions and show strong taxable income. Contractors and consultants who don't write off everything often qualify for larger loan amounts this way.
You need clean tax filings and consistent 1099 income from multiple clients. One or two major clients raising 50% or more of your revenue strengthens your file.
Bank statement loans use 12 or 24 months of business or personal bank deposits to calculate income. Lenders apply a percentage to your average monthly deposits, typically 50% for personal accounts or 75% for business accounts.
This route works if you write off most of your income and show little taxable profit. Your tax returns might look weak, but your bank account tells the real story.
You avoid the tax return problem entirely. Lenders care about cash flow, not what you reported to the IRS.
1099 loans need tax returns that show income. Bank statement loans don't — they ignore your returns and look only at deposits. If you write off 60% of your revenue, your tax return shows weak income but your bank account proves you're earning.
Rates on 1099 loans typically run 0.25% to 0.75% lower because tax-documented income carries less risk. Bank statement loans cost more but get deals done when tax returns won't work.
Credit score floors differ slightly. Most 1099 programs accept 620 minimum. Bank statement loans often require 640 or higher, especially in competitive markets like West Covina.
Choose 1099 loans if your tax returns reflect most of your income. Consultants, designers, and freelancers who don't carry inventory or equipment often fall here. You'll get better rates and smoother underwriting.
Choose bank statement loans if you run an LLC or S-corp and expense everything legally possible. Contractors, restaurant owners, and retail operators usually qualify for more this way despite lower taxable income.
HousingWire just reported that crypto holdings can now count as reserves on non-QM loans — if you hold Bitcoin or Ethereum, mention it when you apply. That coverage applies to both 1099 and bank statement programs.
No. Lenders pick one income documentation method and stick with it. You apply under either 1099 or bank statement guidelines, not both.
1099 loans typically close 3-5 days faster because tax returns are simpler to verify than 24 months of bank statements. Both average 30-40 days total.
Sometimes. Bank statement loans often require 15%-20% down while 1099 loans can go as low as 10% on primary residences. Program varies by lender.
Lenders average two years, so one weak year won't kill the deal. If income dropped over 20%, expect extra scrutiny and possibly a lower approval amount.
Yes, but it restarts underwriting. If your tax returns come back weaker than expected, switching to bank statements adds 10-15 days to your timeline.