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in Ross, CA
Ross self-employed borrowers usually face a choice: qualify with 1099s or bank statements. Both skip tax returns, but lenders verify income differently.
Most of our Ross clients earning over $500K pick the path that shows the cleanest income story. One highlights gross receipts, the other tracks actual deposits.
1099 loans use your 1099-NEC or 1099-MISC forms to prove income. Lenders average the last two years of 1099 income without digging into your tax returns.
This works best when your 1099s show consistent or rising income with minimal business deductions. Lenders typically apply a 10-25% expense ratio to your gross 1099 income.
You need 620+ credit and 15-20% down for most properties. Rate premium runs 0.5-1.5% above conventional depending on your debt-to-income ratio.
Bank statement loans analyze 12 or 24 months of personal or business bank deposits. Lenders calculate monthly income by averaging total deposits minus standard expense deductions.
This option shines when you write off heavy expenses but your accounts show strong cash flow. Lenders apply 25-50% expense ratios depending on deposit patterns.
Minimum 640 credit and 15-20% down for purchase. Some lenders accept business-only bank statements if your income doesn't flow through personal accounts.
The core split: 1099 loans look at what clients paid you, bank statements track what actually hit your accounts. That matters when you collect cash, use third-party processors, or keep revenue in business accounts.
Bank statements catch more income types—client payments, transfers, investment deposits. 1099s only count contract work reported to the IRS. Expense assumptions also differ significantly.
Processing speed favors 1099 loans since two forms beat analyzing months of transactions. But bank statements give you more control over which accounts to submit.
Choose 1099 loans when your forms accurately reflect your income and you don't write off 30%+ in business expenses. This works for consultants, tech contractors, and creatives who operate lean.
Bank statement loans make sense when you write off substantial expenses or earn income that doesn't appear on 1099s. We see this with Ross business owners who reinvest heavily or use business banking.
Run both calculations before deciding. I've seen borrowers qualify $200K higher on bank statements despite lower 1099 totals because their deposit activity told a better story.
No, lenders pick one income documentation method per loan. You choose the approach that shows your qualifying income most favorably.
Rates vary by borrower profile and market conditions. Neither consistently beats the other—pricing depends on credit, down payment, and total debt ratio.
Most programs skip full tax return review. Some lenders want returns to verify you filed, but they don't use Schedule C for income calculation.
Lenders average two years, so one down year gets blended. Bank statements might work better if your deposits stayed consistent despite lower 1099 totals.
Yes, we can pivot mid-process. I often run initial numbers both ways to see which path gets you to your target loan amount.