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in Alturas, CA
Self-employed borrowers in Alturas have two strong non-QM mortgage options that don't require traditional W-2 income verification. Both 1099 loans and bank statement loans help independent contractors, freelancers, and business owners qualify for home financing.
The right choice depends on how you receive your income and which documentation method works best for your specific situation. Understanding the key differences helps you pick the option that maximizes your qualifying power.
1099 loans use your 1099 forms to document income, making them ideal for contractors and freelancers who receive these tax documents from clients. Lenders typically review one to two years of 1099s to establish your qualifying income.
This option works best when you have consistent 1099 income from reliable sources. The straightforward documentation process appeals to borrowers with clean, well-organized tax records and minimal business deductions.
Rates vary by borrower profile and market conditions. Most 1099 loan programs require credit scores of 620 or higher, though some lenders accept lower scores with compensating factors.
Bank statement loans analyze 12 to 24 months of personal or business bank deposits to calculate your qualifying income. This method captures your actual cash flow rather than relying solely on tax returns.
This approach benefits self-employed borrowers who write off significant business expenses, reducing their taxable income but maintaining strong cash flow. Lenders typically use a percentage of your deposits to determine qualifying income.
Rates vary by borrower profile and market conditions. Bank statement programs generally require credit scores of 620 or higher, with some lenders offering options down to 600 for borrowers with larger down payments.
The main difference lies in documentation: 1099 loans require official tax forms from your clients, while bank statement loans use your actual deposit history. Bank statements often reveal higher qualifying income for borrowers who take substantial business deductions.
1099 loans work better when your income is stable and your tax returns accurately reflect your earnings. Bank statement loans shine when your deposits exceed what your tax returns show after deductions.
Both programs typically require 10-20% down payments in Alturas, though exact requirements depend on credit strength and property type. Neither option requires traditional employment verification through W-2s or pay stubs.
Choose a 1099 loan if you receive regular 1099s from clients and your tax returns show strong, consistent income. This option offers straightforward documentation when you don't take heavy business deductions.
Choose a bank statement loan if you're self-employed with significant write-offs that reduce your taxable income. This option also works well for business owners who mix personal and business income or have irregular 1099 patterns.
Many Alturas borrowers benefit from applying for both options simultaneously to compare terms and qualifying amounts. An experienced mortgage broker can run the numbers both ways to determine which path offers better approval odds and loan terms for your specific situation.
Most lenders require you to choose one documentation method. However, some programs allow hybrid approaches combining different income sources. Your mortgage broker can identify lenders offering flexibility if your situation warrants it.
Bank statement loans often qualify borrowers for higher amounts because they capture gross deposits before business deductions. The actual difference depends on your specific tax situation and expense structure.
Rates vary by borrower profile and market conditions. Non-QM loans typically carry slightly higher rates than conventional financing, reflecting the alternative documentation methods. The rate difference often ranges from 0.5% to 2%.
Both typically take 30-45 days from application to closing. Bank statement loans may take slightly longer if underwriters need to review extensive transaction histories across multiple accounts.
Yes, you can refinance between these programs or into conventional financing if your situation changes. Many self-employed borrowers refinance once their tax returns show higher income or they qualify through traditional methods.