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in San Diego, CA
San Diego's tech sector, biotech firms, and creative industries produce thousands of self-employed borrowers every year. Most don't qualify for traditional mortgages because their tax returns show low income after write-offs.
Both 1099 loans and bank statement loans solve this problem, but they verify income differently. One works from your 1099 forms, the other from your actual bank deposits.
1099 loans calculate your income from the gross figures on your 1099 forms, before business deductions. Lenders typically use 100% of that gross income if you've been in the same field for two years.
You'll need 12-24 months of 1099 forms from clients, a profit-loss statement, and sometimes business bank statements. Credit minimums run 620-640 depending on down payment.
Bank statement loans analyze 12 or 24 months of business or personal bank deposits to determine income. Lenders apply expense factors based on your business type—usually 25-50% of deposits count as income.
You submit bank statements, a CPA letter, and sometimes a profit-loss statement. Most programs require 640 credit minimum, though some lenders go to 600 with larger down payments.
The core difference is income calculation. 1099 loans use your reported contractor income at full value. Bank statement loans look at cash flow, applying expense ratios that reduce your qualifying income.
If you have three major clients who each send monthly 1099 payments, the 1099 loan gives higher buying power. If your income arrives irregularly or from many sources, bank statements often work better because they capture everything hitting your account.
Choose a 1099 loan if most of your income comes from a few clients who issue 1099 forms, and you want maximum buying power. It treats your contractor income like W-2 wages without the deduction penalty.
Go with bank statement loans if you have multiple income sources, cash clients, or irregular payment schedules. They're also better if your 1099 income doesn't fully represent your cash flow because you get paid through other channels.
Some lenders blend them, but most programs require you to choose one income documentation method. We run both scenarios to see which delivers higher approval.
1099 loans typically price 0.25-0.5% lower because income documentation is more straightforward. Rates vary by borrower profile and market conditions.
Yes, though minimums increase. Expect 20-25% down for investment properties and credit scores starting at 660 for either program.
Both start at 10% down for primary homes with strong credit. Most San Diego buyers put down 15-20% to get better rates.
You need two years of self-employment history in the same field. Switching from W-2 to 1099 in your existing profession usually counts.