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in Ukiah, CA
Both 1099 and bank statement loans solve the same problem: qualifying without W-2s. But they verify income differently, which changes who gets approved and at what rate.
Ukiah's mix of agriculture, wine industry contractors, and remote workers means plenty of self-employed buyers. Choosing the wrong non-QM program costs you either in rate or approval odds.
1099 loans use your tax forms to calculate income. Lenders average your 1099 earnings over 12-24 months, then factor in expenses you claimed.
This works best when your tax returns show strong net income. If you write off everything to minimize taxes, your qualifying income drops hard.
Credit minimums typically start at 620. Down payments run 10-20% depending on loan amount and property type.
Bank statement loans skip tax returns entirely. Lenders review 12-24 months of business or personal bank deposits to calculate income.
They apply an expense factor (usually 25-50%) to your average monthly deposits. Higher gross deposits mean stronger qualifying income, even if you wrote off most profit.
Credit requirements match 1099 loans at 620 minimum. Down payments also run 10-20%, with rates varying by borrower profile and market conditions.
The split comes down to how you manage taxes. Conservative tax filers with clean 1099 net income qualify easier with 1099 loans. Aggressive deduction takers need bank statements.
Documentation differs completely. 1099 loans need your tax returns and 1099 forms. Bank statement loans need consecutive monthly statements showing consistent deposits.
Rates tilt slightly toward 1099 loans when your tax returns are strong. Bank statement pricing reflects higher perceived risk from undocumented expenses.
Choose 1099 loans if your net income on returns supports the mortgage you need. This typically means writing off less than 40-50% of gross revenue.
Go with bank statements if you write off aggressively or your business shows minimal taxable profit. The bank sees your actual cash flow, not what you reported to the IRS.
In Ukiah's market with vineyard contractors, hospitality consultants, and ag specialists, I see bank statements close more deals. Most self-employed borrowers optimize taxes first, home buying second.
Yes, but business accounts usually work better. Personal accounts include non-income deposits that complicate the underwriter's math.
Both programs average your income over 12-24 months. Seasonal swings get smoothed out in the calculation.
Most lenders want two years. Some accept one year if you worked in the same field as a W-2 employee before going independent.
Bank statements often move quicker. Underwriters don't wait on IRS transcripts or chase missing 1099 forms from multiple clients.
Yes, we can pivot if the numbers work better. That's why we pull both income calculations upfront before locking rate.