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in Willits, CA
Both 1099 loans and bank statement loans solve the same problem for Willits self-employed borrowers: getting approved without W-2s. The difference is how lenders calculate your qualifying income.
1099 loans use your tax forms to prove earnings. Bank statement loans skip tax returns entirely and review deposits instead.
Most self-employed borrowers fit one option better than the other. Your write-offs and business structure determine which path gets you approved faster.
1099 loans qualify you based on income reported to the IRS on your 1099 forms. Lenders average your last two years of 1099 income to calculate what you can borrow.
You need consistent 1099 earnings for at least two years. Credit scores typically start at 620, and down payments range from 10% to 20%.
This option works well if you claim minimal business deductions. The more write-offs you take, the lower your qualifying income appears to lenders.
Bank statement loans qualify you using 12 or 24 months of personal or business bank statements. Lenders analyze deposits to calculate income without looking at tax returns.
You avoid the write-off penalty entirely. If you deposit $15,000 monthly, lenders count a percentage of that regardless of what you reported to the IRS.
Credit requirements are similar, starting at 620. Down payments typically range from 10% to 20%. Rates run slightly higher than 1099 loans due to the alternative documentation.
The core difference is tax strategy. 1099 loans reward low write-offs. Bank statement loans reward healthy cash flow regardless of what you claimed on Schedule C.
Documentation differs significantly. 1099 loans need tax returns, profit and loss statements, and proof your 1099 income continues. Bank statement loans need just bank statements and a CPA letter verifying self-employment.
Rates vary by borrower profile and market conditions. Bank statement loans typically price 0.5% to 1% higher because lenders see them as riskier without tax return verification.
Choose 1099 loans if your tax returns show strong net income after deductions. This option offers better rates and makes sense when you file conservatively or run a low-overhead business.
Pick bank statement loans if you maximize write-offs every year. Most Willits contractors, tradespeople, and small business owners fit this profile better.
Run the numbers both ways before deciding. We calculate qualifying income under each program to show you which gets you the higher loan amount.
No, you pick one income documentation method per loan. Lenders use either tax returns or bank statements, not a combination of both.
You can use personal or business accounts. Personal bank statements work fine if all your self-employment income deposits there.
They total deposits and apply a percentage based on your business type, usually 50% to 75%. Lower percentages account for business expenses.
Neither has a speed advantage. Both take 30 to 45 days. Documentation differences don't significantly affect closing timelines.
Yes, but it restarts underwriting. Switch early if you realize your qualifying income is higher under the other program.