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in Nevada City, CA
Nevada City's self-employed community—freelancers, consultants, business owners—faces a common mortgage challenge. Traditional lenders want W-2s you don't have.
Both 1099 loans and bank statement loans solve this problem, but they verify income differently. Your business structure and how you receive payments determines which path works better.
Most Nevada City self-employed borrowers qualify for one option more easily than the other. The difference comes down to how your income hits your accounts.
1099 loans use your 1099 forms from clients as proof of income. Lenders calculate your qualifying income from these forms, usually averaging 12-24 months of earnings.
This works well if you're a consultant, freelancer, or contractor who gets 1099s regularly. The income verification is straightforward—your forms show exactly what you earned.
Most 1099 programs require 600+ credit and 15-20% down. Rates typically run 0.5-1.5% higher than conventional loans, depending on your profile.
Bank statement loans analyze 12-24 months of business or personal bank deposits. Lenders apply a percentage factor—usually 50-75%—to account for business expenses.
This program works for any business structure. You don't need 1099s, W-2s, or even clean tax returns if your bank statements show consistent deposits.
Credit requirements start around 600-620. Down payments range from 10-20% based on loan amount and deposit consistency. Rates vary by borrower profile and market conditions.
The main split: 1099 loans require actual 1099 forms from clients, while bank statement loans just need deposit history. If half your income is cash or you mix business types, bank statements handle that complexity better.
Documentation differs significantly. 1099 loans are cleaner—you hand over your forms and you're done. Bank statements require underlining every deposit and explaining irregular amounts.
Pricing usually favors 1099 loans by 0.25-0.75% in rate. The streamlined verification reduces lender risk, which translates to better terms for borrowers.
Choose 1099 loans if you're a consultant or freelancer with steady clients who issue proper tax forms. The simpler documentation and lower rates make this the default choice when you qualify.
Go with bank statement loans if you own a business with mixed income sources, receive cash payments, or can't produce enough 1099s. The flexibility costs slightly more but opens doors 1099 programs close.
Nevada City's small business community often needs bank statement programs—retail shops, service businesses, and cash-heavy operations don't generate 1099s. If you're pure contractor work, 1099 loans save money.
Yes. Most lenders accept either or both, depending on where your income deposits. Business accounts often show clearer income patterns.
Most 1099 programs require 12-24 months minimum. You'd need to wait or use a bank statement loan instead.
No, both typically start around 600-620 credit score. Your income consistency matters more than the program type.
1099 loans usually close quicker—less documentation to review. Bank statement loans take 3-5 extra days for deposit analysis.
Yes. If one doesn't work, your broker can pivot to the other. We see this often when 1099 income falls short.