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in Lincoln, CA
Self-employed borrowers in Lincoln face a common problem: traditional mortgage underwriting doesn't recognize your actual income. Tax write-offs that help your business hurt your mortgage approval when lenders only see adjusted gross income.
Both 1099 loans and bank statement loans solve this problem differently. Your income structure and documentation determine which option gets you approved faster with better terms.
1099 loans use your 1099 forms from the past two years to verify income. Underwriters calculate your qualifying income from these forms, typically without requiring full tax returns. This works when you receive consistent 1099 income from clients or platforms.
You'll need steady 1099 income from the same sources. Lenders look for two years of history and minimal income fluctuation. This loan type works for consultants, contractors, and gig workers with documented earnings.
Credit requirements typically start at 620, though better rates come at 680 or higher. Expect down payments from 10% to 20% depending on your credit profile and property type.
Bank statement loans analyze 12 to 24 months of personal or business bank deposits. Underwriters calculate your income from average monthly deposits, applying expense ratios based on your business structure. This captures income that 1099s miss.
You can use personal bank statements, business accounts, or both. Lenders typically assume 50% expenses for personal accounts and higher percentages for business accounts. This approach works when your income flows through accounts rather than 1099 documentation.
Credit minimums usually start at 640, with 15% to 20% down required. Rates vary by borrower profile and market conditions, but typically run higher than conventional loans due to flexible documentation.
The main split: 1099 loans need formal income documentation from clients, while bank statement loans track actual cash flow. If you write off 60% of your income on taxes, 1099 loans still only see what's reported on those forms. Bank statement loans see your full deposits.
Processing speed differs too. 1099 loans move faster when you have clean documentation from consistent sources. Bank statement loans take longer because underwriters analyze every deposit pattern, flagging transfers and one-time payments.
Lincoln's mix of business owners and independent contractors means both options get used frequently. Service providers and consultants lean toward 1099 loans. Business owners with complex revenue streams choose bank statement loans.
Choose 1099 loans when you receive consistent income from identifiable clients or platforms. This works for consultants, IT contractors, and gig workers with steady earnings. You need clean 1099 documentation from the past two years.
Pick bank statement loans when your income doesn't show up on 1099s or when you maximize tax deductions. Business owners, cash-heavy operations, and borrowers with multiple income streams fit this category. You're trading higher rates for documentation flexibility.
Most Lincoln self-employed borrowers know which option fits within five minutes. If you can't produce two years of 1099s showing stable income, bank statements become your path forward.
No, lenders structure these as separate programs. You choose one documentation method per loan application based on your strongest income story.
1099 loans typically price slightly better due to cleaner documentation. Rates vary by borrower profile and market conditions, but both run higher than conventional loans.
Yes, both programs require two years of self-employment documentation. Lenders want to see income stability regardless of verification method.
Yes, both programs work for investment properties. Expect higher down payments and rates compared to owner-occupied purchases.
Lenders use the lower year for qualification. If the drop is significant, bank statement loans might show stronger current income through recent deposits.