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in San Marcos, CA
San Marcos self-employed borrowers have two strong non-QM paths to homeownership. Both skip traditional pay stubs, but they verify income differently.
The right choice depends on how your business income flows. 1099 loans use tax documents, while bank statement loans track deposits.
Most independent contractors qualify for one but not both. Your business structure and write-off strategy determine which works better.
1099 loans use your tax returns and 1099 forms to verify income. Lenders typically review two years of returns to establish consistent earnings.
You need clean tax filings showing steady income year over year. Heavy business deductions that reduce taxable income hurt your qualifying amount.
This works best for contractors with straightforward income and minimal write-offs. You'll qualify based on what you actually reported to the IRS.
Rates typically run 1-2% above conventional loans. Credit scores of 620+ are standard, with 680+ getting better pricing.
Bank statement loans analyze 12-24 months of business or personal bank deposits. Lenders average your deposits to calculate qualifying income.
You can use business accounts, personal accounts, or both. This captures income that doesn't show on tax returns due to write-offs.
Underwriters apply expense ratios to your deposits based on industry. Service businesses get better treatment than product-based businesses with high overhead.
Most programs require 10-20% down and 640+ credit. Rates run 1.5-2.5% above conventional depending on deposit consistency.
The core split is tax reporting versus cash flow. 1099 loans reward clean tax filings, while bank statements reward strong deposits.
Bank statement loans let you qualify on gross deposits before write-offs. 1099 loans use net income after deductions, which is often much lower.
Documentation burden differs too. Bank statements require months of detailed transaction history. 1099 loans need just tax returns and forms.
Credit and down payment standards are similar, but bank statement loans typically cost slightly more. You're paying for the flexibility to ignore tax returns.
Choose 1099 loans if your tax returns show strong net income with few deductions. This path costs less and closes faster with simpler documentation.
Go with bank statements if you write off most revenue for tax purposes. Service professionals and consultants often show big deposits but small taxable income.
San Marcos borrowers in tech contracting, creative services, or consulting typically need bank statement loans. Traditional contractors with equipment expenses often fit 1099 loans better.
Run the numbers both ways before deciding. We calculate qualifying income under each method to show which maximizes your buying power.
No, you choose one verification method per loan. Some lenders allow multiple income sources, but they must use the same documentation type.
1099 loans typically price 0.25-0.5% better than bank statement loans. Rates vary by borrower profile and market conditions.
Most programs require two years of 1099 forms and tax returns. Some allow one year with larger down payments.
Yes, electronic payment deposits count as income. You'll need transaction records showing the deposit source and consistency.
Neither works well under 12 months self-employed. Bank statement loans may approve after one year with 20%+ down.
Not mid-process. Switching requires a new application with different documentation, which restarts your timeline and costs.