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in Livingston, CA
Both loan types solve the same problem: qualifying without W-2s. The difference is how lenders verify what you actually make.
1099 loans rely on tax forms from your clients. Bank statement loans skip those and read deposits straight from your accounts.
Your business structure determines which path works better. Contractors with clean 1099s often get simpler approvals than those writing off half their income.
Lenders add up your 1099 forms from the past two years and average them. You need consistent income from the same clients or industry to qualify.
This works well if you file taxes honestly and don't write off every possible expense. Lenders see the gross income your clients reported paying you.
Most programs require 620+ credit and 15-20% down. Rates run 0.5-1.5% higher than conventional loans depending on your profile.
Lenders analyze 12-24 months of business or personal bank statements. They calculate income by looking at deposits minus obvious transfers or one-time events.
This option works for borrowers who write off significant expenses and show lower taxable income. Your actual cash flow matters more than what you reported to the IRS.
Programs typically need 640+ credit and 20% down minimum. Rates run similar to 1099 loans but documentation requirements are heavier.
1099 loans are faster to underwrite because tax forms are standardized. Bank statement loans require manual review of every deposit to separate business income from transfers or reimbursements.
The math works differently too. 1099 programs use gross income from your forms. Bank statement programs multiply deposits by 50-75% to account for business expenses lenders can't see.
Down payment and credit requirements overlap, but bank statement loans often require slightly more skin in the game. Rates vary by borrower profile and market conditions but typically fall within 1% of each other.
Choose 1099 loans if you receive clean tax forms and your reported income covers the mortgage payment. This works for consultants, freelancers, and contractors who don't maximize deductions.
Pick bank statement loans if you write off trucks, equipment, travel, or home office expenses that reduce your taxable income. The deposit method captures money that disappears on your tax return.
Livingston's agricultural and service economy means many self-employed buyers fit one of these profiles. Talk to a broker who can calculate both scenarios before choosing.
Yes, brokers often run both calculations. Whichever shows higher qualifying income becomes your path forward.
Most programs require two years in the same field. Some bank statement programs accept 12 months with strong reserves.
Rates depend on credit and down payment, not location. Both typically price within 0.5% of each other for similar profiles.
No, lenders pick one income calculation method per loan. Mixing documentation types creates underwriting conflicts.
1099 loans close in 21-30 days typically. Bank statement loans add 7-10 days for manual deposit analysis.