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in Whittier, CA
Self-employed borrowers in Whittier have two main non-QM options when traditional income docs won't cut it. The difference comes down to how lenders verify what you actually make.
1099 loans pull numbers straight from your tax forms. Bank statement loans ignore tax returns and look at deposits instead. Both skip W-2s, but the path to approval looks completely different.
1099 loans work for contractors who report most of their income on tax returns. You'll need two years of 1099 forms showing consistent earnings. Lenders average your reported income and use that number to qualify you.
This route works best if you don't write off major expenses. Every deduction you claim lowers the income lenders can use. That's where many 1099 earners hit a wall — tax strategy kills buying power.
Bank statement loans bypass tax returns entirely. Lenders pull 12 or 24 months of business or personal bank statements and calculate income from deposits. This lets you qualify on what actually hits your account, not what you report to the IRS.
Most programs use a percentage of deposits as qualifying income — usually 50% to 75% depending on business type. The wider the gap between your deposits and reported income, the more this option makes sense.
The core split is tax strategy. If you maximize write-offs to lower your tax bill, bank statements will show higher qualifying income. If you report most earnings without heavy deductions, 1099 loans usually offer better rates.
Documentation is simpler with 1099 loans — just tax returns and 1099 forms. Bank statement programs require months of statements, sometimes both personal and business accounts. Underwriting takes longer and rates run 0.5% to 1% higher on bank statement deals.
Run the numbers on both. If your reported 1099 income is close to your actual deposits, take the 1099 loan for better pricing. If you write off 30% or more of gross revenue, bank statements will likely show more usable income despite higher rates.
Most Whittier contractors I work with land in bank statement programs because write-offs crush their reported income. You're trading rate for approval — but getting approved at 6.5% beats getting denied at 5.75%. Rates vary by borrower profile and market conditions.
Most lenders pick one method or the other, not both. They'll review both options and run you through whichever shows stronger qualifying income for your situation.
1099 loans typically price 0.5% to 1% lower than bank statement programs. You pay for flexibility — bank statement loans offset higher documentation risk with higher rates.
Not for 1099 loans if you're a true independent contractor. Bank statement programs sometimes require proof of business if using business accounts, but personal statements work too.
Both programs can go up to $3-4 million depending on lender. Your actual limit depends on income calculation, credit, and assets — not the program type.
Yes, you can refinance between programs anytime. Many borrowers start with one and switch when their tax situation or business structure changes.