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in San Rafael, CA
San Rafael's self-employed professionals—consultants, designers, tech contractors—need mortgages that recognize how they actually earn money. Both 1099 loans and bank statement loans skip traditional W-2 verification, but they prove income differently.
Your documentation type matters more than which loan sounds better. One pulls from tax forms, the other from deposit patterns. Most San Rafael borrowers qualify for both but get better terms with one over the other.
1099 loans use your 1099 forms to verify income—the same documents independent contractors already file. Lenders average your last two years of 1099 income to calculate what you can borrow. No need to write business expense letters or explain deposit patterns.
This works best when your 1099 income is clean and consistent. If you earned $180K last year and $190K the year before, underwriting is straightforward. Rates vary by borrower profile and market conditions, but expect pricing similar to other non-QM products.
Bank statement loans analyze 12 to 24 months of personal or business bank deposits. Underwriters calculate your monthly income based on what actually hits your accounts. They apply an expense factor—usually 25% to 50%—to account for business costs.
This option shines when your tax returns show lower income than you actually bring in. Many San Rafael business owners write off significant expenses, reducing taxable income but not actual cash flow. Bank statements show the real picture before deductions.
The core difference is what counts as income. 1099 loans look at what you reported to the IRS. Bank statement loans look at what you deposited. If you write off 40% of your revenue on taxes, bank statements will show higher qualifying income.
Documentation burden differs too. 1099 loans need cleaner paperwork but less of it—just your forms and tax returns. Bank statements require every page from 12-24 months, and underwriters scrutinize transfers, refunds, and irregular deposits. Expect more questions with bank statement loans.
Choose 1099 loans when your reported income supports your target loan amount and stays steady year over year. They process faster and underwriters ask fewer questions. Most tech contractors and consultants in San Rafael fit this profile if they're not maxing out write-offs.
Pick bank statement loans when you write off significant expenses or your income fluctuates. If your Schedule C shows $120K but your deposits total $220K, bank statements prove higher income. Expect rates about 0.25% to 0.75% higher than 1099 loans due to additional underwriting complexity.
Most self-employed borrowers qualify for both. We run your numbers through each program to find which delivers better loan terms and lower rates.
Not always. If you don't write off much, your 1099 income may equal or exceed what bank statements show after expense factors get applied.
1099 loans typically close 3-5 days faster because bank statement underwriting takes longer to review and verify all deposits.
Either works, and some lenders accept both. Business accounts often show cleaner income patterns without personal expenses mixed in.
Most lenders want 620 minimum for both programs. Higher scores unlock better rates and lower down payment requirements.