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in Oceanside, CA
Self-employed borrowers in Oceanside face a choice between two income documentation methods. Both are non-QM loans designed for people who can't provide traditional W-2s.
1099 loans verify income through tax forms from clients who paid you. Bank statement loans use your actual deposits over 12-24 months.
The right choice depends on how you structure your business and what your tax returns show versus what actually hits your account.
1099 loans use the income reported on your 1099-MISC or 1099-NEC forms from clients. Lenders typically average two years of 1099 income to determine what you qualify for.
This works well if you claim minimal deductions and your 1099 forms reflect strong earnings. The lender sees what clients paid you, then applies standard self-employment tax adjustments.
Most programs require 10-20% down and credit scores above 620. Rates run 0.5-1.5% higher than conventional loans.
The challenge: if you write off significant expenses, your qualifying income drops even though your bank account looks healthy.
Bank statement loans calculate income from deposits in your business or personal accounts. Lenders review 12 or 24 months of statements and apply expense ratios ranging from 0% to 50%.
A business account typically gets a 50% expense ratio—meaning lenders count half your deposits as income. Personal accounts get 0-25% deductions depending on the lender.
This option shines when you write off heavy expenses that tank your tax return but your deposits tell a better story. You can qualify on cash flow instead of adjusted gross income.
Minimum 10-15% down, 600+ credit score in most cases. Rates run similar to 1099 loans or slightly higher depending on documentation strength.
The core difference is what income source the lender examines. 1099 loans look at what clients reported paying you. Bank statement loans look at what actually landed in your account.
If you're a contractor in Oceanside who takes standard deductions, 1099 loans are simpler. If you're a business owner who writes off vehicles, home office, and travel, bank statements usually qualify you for more.
Documentation also differs. 1099 loans need your tax returns plus the actual 1099 forms. Bank statement loans skip tax returns entirely in some programs—just statements and a P&L.
Rate and down payment requirements overlap significantly. Both programs price based on credit, LTV, and documentation quality rather than the income verification method.
Run this test: compare your total 1099 income from last year to your average monthly deposits times twelve. If the numbers are close, go with 1099 loans—cleaner documentation, faster process.
If your deposits crush your reported 1099 income because of business expense write-offs, bank statement loans will qualify you for significantly more house. This is common with trades contractors and small business owners.
Some borrowers use both strategically. If you have strong 1099 income from one client and business deposits from others, a broker can structure the file using whichever yields better qualifying numbers.
In Oceanside's competitive market, the loan that qualifies you for the purchase price you need is the right loan. We shop both options across 200+ lenders to find your best fit.
Most lenders require choosing one documentation method per loan. However, a broker can run scenarios with both and pick whichever qualifies you higher.
1099 loans typically close slightly faster because documentation is more standardized. Bank statement underwriting takes extra time to analyze deposit patterns.
1099 loans always need returns. Some bank statement programs waive tax returns entirely, verifying income purely from deposits and a profit-loss statement.
Rates are nearly identical when comparing similar credit and down payment. Pricing depends more on risk factors than the income documentation type you choose.
Lenders average the two years, so one strong year can offset a weaker one. Bank statements smooth out fluctuations by looking at 12-24 months of deposits.