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in Chowchilla, CA
Both 1099 loans and bank statement loans help self-employed borrowers in Chowchilla qualify without W-2s. The key difference is how lenders calculate your income.
1099 loans use your tax forms directly. Bank statement loans pull income from deposits over 12-24 months. Your documentation determines which path makes sense.
1099 loans use your 1099 forms to verify income, typically requiring one or two years of returns. Lenders calculate qualifying income from your total 1099 earnings, often without heavy expense deductions.
This works well if you receive consistent 1099s from established clients. Most programs require 600+ credit and 15-20% down. Rates typically run 1-2% above conventional.
Bank statement loans analyze 12-24 months of business or personal bank deposits. Lenders use a percentage of your total deposits as qualifying income, typically 50-75% depending on your business type.
This option works if you have inconsistent 1099s or mix cash and check deposits. You need the same credit requirements as 1099 loans. Down payment starts at 10-15% for strong profiles.
Documentation is where these diverge. 1099 loans need clean tax forms showing reportable income. Bank statement loans work even if you write off most earnings or handle cash transactions.
Income calculation also differs significantly. With 1099 loans, your reported income is your qualifying income. Bank statements apply a percentage to deposits, which can help if you have high gross revenue but aggressive deductions.
Choose 1099 loans if you file returns showing solid income and receive consistent 1099 forms. This path typically offers slightly better rates and simpler underwriting.
Go with bank statements if you write off most income, handle cash transactions, or have irregular 1099 documentation. The flexibility costs about 0.25-0.5% more in rate but opens doors when tax returns don't tell the full story.
Some lenders blend documentation, but most pick one method. If your 1099s show enough income, that's usually the simpler path with better pricing.
Either works for bank statement loans. Business accounts are cleaner if you keep finances separated. Personal accounts work fine for sole proprietors.
1099 loans typically underwrite faster since documentation is more standardized. Bank statement loans need more analysis but both close in 30-45 days with complete files.
Lenders usually average the most recent two years. A bad year hurts your qualifying income. Bank statements might work better if deposits stayed consistent.
Bank statement loans typically run 0.25-0.5% higher than 1099 loans. Both sit 1-2% above conventional rates. Your credit and down payment matter more than program choice.