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in Los Banos, CA
Most self-employed borrowers in Los Banos face the same challenge: your tax returns show less income than you actually bring home. Both 1099 loans and bank statement loans solve this problem by looking past your tax returns.
The difference comes down to how your income flows. If you get 1099s from multiple clients, that's one path. If most revenue hits your business account first, that's another.
We've closed both loan types for contractors, consultants, and business owners across Merced County. The right choice depends on how you structure your business and what documentation you can easily provide.
1099 loans calculate your income directly from your 1099 forms over the past two years. Lenders total the income from your forms and average it. No complicated expense deductions or business write-offs to explain.
This works best when you receive most income as a contractor or consultant. Think freelance engineers, tech workers, or construction professionals who get 1099-MISC or 1099-NEC forms from clients.
You'll need consistent 1099 income from the same industry for at least two years. Lenders want to see you're not bouncing between unrelated fields. Rates typically run 1-2 points above conventional loans. Rates vary by borrower profile and market conditions.
Bank statement loans use 12 or 24 months of personal or business bank statements to calculate income. Lenders look at deposits, subtract obvious transfers, and apply an expense factor (usually 25-50%).
This loan type fits business owners who run revenue through a company account before paying themselves. Your tax returns might show minimal personal income after business write-offs, but your statements show the real cash flow.
You can use personal statements, business statements, or both. Most Los Banos borrowers use business accounts because deposits are cleaner and show higher income. Expect rates 1.5-2.5 points above conventional.
The biggest split is documentation complexity. 1099 loans need your forms and maybe a CPA letter. Bank statement loans require every page from 12-24 months of statements, plus explanations for large deposits.
Income calculation differs too. 1099 loans take your gross 1099 income and average it. Bank statement loans total deposits, subtract transfers and non-income items, then reduce by an expense percentage.
1099 loans typically show higher qualifying income if you have minimal business expenses. Bank statement loans work better when your 1099 income is inconsistent or you mix 1099 and business revenue.
Both require 620+ credit and 10-20% down in most Los Banos scenarios. Neither uses debt-to-income ratios the way conventional loans do, which helps if you carry business debt.
Choose 1099 loans if you're a contractor or consultant who receives most income directly from clients as 1099 payments. You'll close faster and deal with less paperwork.
Pick bank statement loans if you run income through a business entity, mix 1099 with other revenue, or have inconsistent 1099 amounts. The extra documentation pays off when your statements show strong deposits.
Most Los Banos self-employed borrowers qualify for both. We run the numbers both ways and show you which delivers better terms. Often it comes down to which income story is cleaner to tell.
No, you pick one method. Some lenders will review both and let you choose which qualifies you for more, but you can't combine calculation methods on a single application.
Not for 1099 loans. Bank statement loans sometimes require a business license if you're using business accounts, but not always.
Rates are similar, usually within 0.25-0.5%. Your credit score, down payment, and property type matter more than which self-employed program you choose.
Both require two years in the same field or industry. 1099 loans need two years of forms. Bank statement loans need 12-24 months of statements.
Yes, both work for investment properties in Los Banos. Expect higher rates and down payment requirements, usually 20-25% down minimum.