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in Escalon, CA
Both loan types serve self-employed borrowers in Escalon who can't use traditional W-2 income verification. The right choice depends on how your income flows through your business and what you report to the IRS.
Most 1099 contractors have cleaner income documentation than full business owners. Bank statement loans work better when your deposits tell a different story than your tax returns.
1099 loans use your actual 1099 forms to prove income. Lenders typically average two years of 1099 income, sometimes applying an expense ratio between 0% and 25%.
This works best for contractors with multiple clients who issue proper 1099s. You'll need consecutive 1099s from the same clients to show income stability.
Credit requirements start around 620, though better rates kick in at 680 or higher. Down payments range 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. Lenders calculate income by reviewing deposits and applying expense ratios, usually 25% to 50% depending on your business structure.
This program benefits borrowers who write off significant expenses and show lower taxable income. Your bank statements prove cash flow that tax returns don't capture.
Minimum credit scores start around 620, with improved pricing at 700-plus. Expect 10% to 20% down for single-family homes in Escalon, more for investment properties.
The core difference is documentation. 1099 loans need formal income documents from your clients. Bank statement loans only need deposit records from your checking account.
Income calculation varies significantly. 1099 loans use reported income directly. Bank statement loans reconstruct income from deposits, applying expense ratios that can dramatically affect qualifying amounts.
Bank statement loans typically cost more. Rates run 0.5% to 1.5% higher than 1099 loans because lenders see bank statements as less reliable income proof.
Choose 1099 loans if you receive proper 1099 forms and report most of your income. This path offers better rates and simpler underwriting for contractors with clean documentation.
Go with bank statement loans if you write off major business expenses or run income through an LLC. This works when your deposits exceed what you report on tax returns.
Some Escalon borrowers don't fit either perfectly. If you have inconsistent 1099 clients or messy bank statements, a broker can shop both programs to find which one qualifies you for more house.
No. Lenders structure these as separate programs with different underwriting. You'll apply under one or the other, not both simultaneously.
Depends on your expense ratios. 1099 loans use reported income directly. Bank statement loans apply 25-50% expenses, which can lower or raise qualifying income.
Yes, but expect higher rates and larger down payments. Investment properties typically require 20-25% down regardless of which non-QM program you use.
Most lenders want two years minimum. Some accept one year if you transitioned from similar W-2 work in the same field.
Absolutely. Both 1099 and bank statement loans work for purchase and refinance. Rate-and-term refinances follow the same qualification rules as purchases.