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in Colfax, CA
Both programs solve the same problem for Colfax's self-employed borrowers: proving income without W-2s. The difference lies in how you document what you earn.
1099 loans work for contractors with clean tax returns. Bank statement loans work better when your tax returns show heavy write-offs that lower your qualifying income.
1099 loans use your tax returns and 1099 forms to calculate income. Lenders typically average your last two years of 1099 earnings to determine what you qualify for.
This works well if you claim most of your income and don't write off much. You need consistent 1099 history showing stable or growing earnings.
Credit requirements start around 620, though 680+ gets better rates. Most lenders require 10-20% down depending on your credit profile.
Bank statement loans skip tax returns entirely. Lenders review 12 or 24 months of business or personal bank deposits to calculate your monthly income.
They apply an expense factor—usually 25-50%—to account for business costs. If your statements show $10,000 monthly deposits, they might qualify you on $6,000-$7,500.
Minimum credit score is typically 620-640. Down payments range from 10% to 20% based on your credit and cash flow strength.
The big split is tax write-offs. If you write off 40% of your income, your tax returns show less qualifying income than your bank deposits do.
1099 loans use what you reported to the IRS. Bank statement loans use what actually hit your account before deductions.
Bank statement programs usually cost 0.25-0.75% more in rate because underwriting is more manual. Rates vary by borrower profile and market conditions.
Processing time is similar—both take 30-45 days. Bank statement loans require more documentation upfront since underwriters review every deposit.
Choose 1099 loans if your tax returns show good income without major write-offs. This path costs less and works faster when your paperwork is clean.
Choose bank statement loans if you run aggressive deductions that crush your taxable income. The rate premium pays for itself when it gets you approved at a higher loan amount.
Colfax has plenty of contractors, consultants, and small business owners who need these programs. We run both scenarios to see which one qualifies you for more house.
No. Lenders use one method or the other, not both. We pick whichever documentation shows your income more favorably.
Personal accounts work fine if your income deposits are clear. Business accounts make underwriting faster but aren't mandatory.
Most lenders want two years. Some bank statement programs accept 12 months if your income is strong and you have excellent credit.
Expect 0.5-1.5% above conventional rates. The gap closes fast when your credit is above 700 and you put 20% down.
Yes. Many borrowers start with bank statements then refi to 1099 once their tax returns look stronger.