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in Fort Bragg, CA
Fort Bragg's economy runs on self-employed workers, from fishing captains to cannabis consultants. Both 1099 loans and bank statement loans serve self-employed borrowers, but they verify income differently.
Your income documentation determines which loan works. If you file 1099s and show clean tax returns, one option wins. If your deposits tell a better story than your returns, the other makes sense.
1099 loans use your filed tax returns to calculate income. Lenders average your 1099 earnings over 12-24 months. This works when you don't write off every possible expense.
You need two years of 1099s and matching tax returns. Credit minimums typically start at 620. Rates run 1-2% above conventional loans because it's non-QM financing.
Bank statement loans skip tax returns entirely. Lenders review 12-24 months of business or personal bank deposits. They calculate your income from total deposits minus a percentage for expenses.
Most lenders use a 50% expense ratio for personal accounts, 25% for business accounts. This method often shows higher income than tax returns. Minimum credit scores usually start at 620-640.
The core split: 1099 loans reward conservative tax filing, bank statement loans reward strong cash flow. If you write off 60% of income, your tax returns look weak but your bank account looks strong.
Bank statement loans cost more. Expect rates 0.5-1% higher than 1099 loans. You're paying for the flexibility to ignore tax returns. Down payment requirements run similar, typically 10-20% for both options.
Pick 1099 loans if your tax returns show 80%+ of your actual earnings. You'll get better rates. Pick bank statement loans if you write off aggressively and your deposits dwarf your net income.
Fort Bragg self-employed borrowers often start with 1099 loans and switch to bank statements after a CPA optimizes their taxes. Run the numbers both ways before deciding. Rates vary by borrower profile and market conditions.
No. Lenders pick one income documentation method per loan. You'll apply under either 1099 or bank statement guidelines, not both simultaneously.
1099 loans typically close 5-7 days faster. Bank statement underwriting takes longer because lenders manually review every deposit across 12-24 months.
Not usually. Lenders verify income through documentation, not business registration. Some ask for a CPA letter confirming self-employment status.
Both loans average income over 12-24 months, smoothing seasonal swings. Bank statements often work better if deposits spike at year-end but returns look thin.
Yes. Many borrowers refinance when their tax strategy changes. Just meet the new loan's credit and equity requirements at refinance time.