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in Mountain House, CA
Both 1099 loans and bank statement loans serve self-employed borrowers in Mountain House who can't qualify with W-2 income. The main difference is how each program documents your earnings—1099s show gross revenue, while bank statements reveal actual cash flow.
Most self-employed buyers ask which option costs less or approves faster. The real answer depends on how your business runs and what shows up in your financial records.
1099 loans use your 1099 forms from the past one or two years to calculate income. Underwriters typically average your gross 1099 earnings, then apply standard expense ratios based on your industry.
This works well if you're a contractor with consistent 1099 income and minimal business expenses. Most lenders require 620+ credit and 10-20% down. Rates run 0.5-1.5% above conventional depending on credit profile.
Bank statement loans analyze 12 or 24 months of personal or business bank deposits. Underwriters calculate income by averaging monthly deposits, then deducting an expense ratio—usually 25-50% depending on your business type.
This option helps when your 1099s show lower income due to business write-offs, but your bank statements prove strong cash flow. Credit requirements start at 620, with 10-20% down typical. Rates vary by borrower profile and market conditions.
The core split is gross income versus net cash flow. 1099 loans focus on what clients pay you before expenses. Bank statement loans look at what actually lands in your account after you run your business.
Documentation also differs—1099 loans need your tax forms and sometimes a CPA letter. Bank statement loans require consecutive monthly statements with no gaps. Processing time is similar for both, usually 30-45 days in Mountain House.
Choose 1099 loans if your tax returns show solid gross income and you don't write off heavy expenses. Independent consultants, real estate agents with clean books, and contractors with minimal overhead often qualify easier this route.
Go with bank statement loans when your 1099 income looks thin due to legitimate business deductions, but your bank deposits prove you earn more. This fits many San Joaquin County small business owners who maximize tax write-offs but still have strong cash flow.
Some lenders allow hybrid approaches, but most require you to choose one documentation method. A broker can structure your file to show the strongest income picture.
Rates are similar for both programs—your credit score, down payment, and loan amount matter more than documentation type. Expect 0.5-1.5% above conventional rates.
Most lenders want two years, but some accept one year if you have strong credit and reserves. Bank statement loans sometimes allow shorter history than 1099 programs.
Underwriters average your income across the review period. Bank statement loans handle seasonal businesses better since they track monthly deposits, not annual totals.
Yes, both programs work for primary residence, second home, and investment property purchases. Investment deals typically require 20-25% down regardless of loan type.