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in El Cajon, CA
El Cajon's self-employed borrowers have two strong non-QM options for mortgage approval. Both skip traditional tax returns, but they verify income in completely different ways.
1099 loans use your contractor statements directly. Bank statement loans pull income from your deposits. Which you choose depends on how your business handles cash flow and expenses.
1099 loans use the gross income from your 1099 forms to qualify you. Lenders typically require one or two years of 1099s from the same clients or industry.
This works best if you're a contractor with steady clients and minimal business expenses. Your 1099 shows $120K, you qualify on something close to $120K. No write-offs eroding your qualifying income.
Most programs accept 620+ credit and allow up to 90% LTV on purchases. Rates run 1-2% above conventional, and you'll need reserves—usually 6-12 months of payments in the bank.
Bank statement loans analyze 12 or 24 months of business or personal bank deposits. Lenders calculate your average monthly income, then apply an expense ratio—usually 25% to 50%.
If your statements show $15K monthly deposits and the lender uses a 40% expense factor, you qualify on $9K per month. This method works when your 1099s don't tell the full story of your cash flow.
Credit requirements start at 620, sometimes lower with strong compensating factors. LTV caps vary by lender but often max at 85-90% on purchases. Expect rates similar to 1099 loans, plus 6-12 months reserves.
The biggest split is income calculation. 1099 loans use what's on the forms—simple and direct. Bank statement loans average your deposits, then reduce by an expense factor. Same gross revenue can yield different qualifying income.
1099 loans require stable contractor relationships. You need recognizable clients or consistent work in one field. Bank statement loans don't care where deposits come from—multiple clients, mixed income streams, cash businesses all qualify.
Documentation also differs. 1099 loans need those specific tax forms plus a profit and loss statement. Bank statement loans require full monthly statements with no gaps. If your bank records are messy or incomplete, 1099 is cleaner.
Choose 1099 loans if you're a contractor with low overhead and clear documentation. If your business expenses are minimal and you have steady 1099s from established clients, this route qualifies you on higher income with less hassle.
Pick bank statement loans if you write off heavy expenses, run a cash-intensive business, or blend multiple income sources. This option captures your true cash flow even when tax returns show little profit. It's also the move if you don't receive formal 1099s but have consistent deposits.
El Cajon borrowers often mix both—some have partial 1099 income plus cash work. We model both scenarios and show you which delivers better buying power. Rates vary by borrower profile and market conditions.
Not on the same loan. Lenders pick one income verification method. We choose whichever gives you the higher qualifying income and better terms for your situation.
Neither uses tax returns for income qualification. That's the whole point. However, some lenders still request returns to verify you're filing and current on taxes.
Rates are nearly identical—both are non-QM products priced similarly. Your credit score and down payment affect your rate more than which income doc you choose.
1099 loans typically need one to two years of forms. Bank statement loans require 12 or 24 months of statements. Longer history sometimes lets you qualify with less seasoning.
1099 loans want consistent contractor work with no major interruptions. Bank statement loans are more forgiving of seasonal dips if the overall trend shows steady deposits.