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in Belvedere, CA
Both 1099 and bank statement loans serve self-employed borrowers in Belvedere who can't qualify with traditional W-2 documentation. The right choice depends on how you receive income and what shows up cleanly on your tax returns versus your bank deposits.
Most Belvedere self-employed buyers I work with earn significantly more than they report after deductions. If your 1099s show strong income without heavy write-offs, that route works. If your tax returns are lean but your bank deposits tell a better story, bank statements make more sense.
1099 loans use your 1099 forms to verify income without requiring full tax returns in most cases. Lenders calculate qualifying income from those forms, making this option faster if your 1099 income is clean and consistent.
This works best when you don't take aggressive tax deductions that reduce your reportable income. You need 12-24 months of 1099 history with the same clients or industry to show stability.
Bank statement loans analyze 12 or 24 months of business or personal bank statements to calculate your income. Lenders look at total deposits, subtract transfers and non-income items, then apply a percentage for expenses.
This route shines when your actual cash flow exceeds what appears on tax returns due to deductions. Most programs use 50% of deposits as qualifying income for personal accounts, 75% for business accounts.
The core difference is documentation path: 1099 loans lean on third-party income reporting while bank statements reveal actual cash flow. Bank statement loans typically allow higher qualifying income if you take significant write-offs, but rates may run 0.25-0.50% higher.
Processing time favors 1099 loans since there's less statement review and expense calculation. Bank statement deals need more underwriting work to categorize deposits and verify they're income rather than transfers or loans.
Choose 1099 loans if your forms accurately reflect your income and you haven't written off 40-50% of revenue. This path offers cleaner underwriting and often better rates since the income verification is more straightforward.
Go with bank statement loans when your tax returns show minimal net income due to depreciation, home office deductions, or vehicle write-offs. I see this constantly in Belvedere with real estate agents, consultants, and small business owners who maximize deductions but maintain strong cash flow.
No, lenders choose one income documentation method per file. Mixing them creates compliance issues and inconsistent income calculations that underwriters can't reconcile.
Yes, most non-QM programs require 15-20% down regardless of income documentation type. Credit score and property type affect this more than your income verification method.
1099 loans typically price 0.25-0.50% lower because the income verification is cleaner. Bank statement loans carry slightly higher risk pricing due to the deposit analysis involved.
Most lenders want 12-24 months of documentation. Two years creates a stronger file and opens more program options with better pricing.
Bank statement loans handle income volatility better since lenders average all deposits over the statement period. 1099 programs prefer consistent quarterly earnings from the same sources.