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in Tracy, CA
Tracy's self-employed borrowers have two strong non-QM paths to homeownership. Both 1099 loans and bank statement loans skip traditional income verification, but they look at your earnings differently.
Most Tracy contractors assume they're stuck with one option. The truth is your business structure and how you manage income determines which loan actually gets you approved.
Rates vary by borrower profile and market conditions. We see approval rates differ by 30-40% between these programs based solely on how borrowers document their income.
1099 loans use your actual 1099 forms to calculate income. Lenders typically average your gross 1099 income over 12-24 months, then apply business expense deductions.
This works best if you receive consistent 1099s and don't run expenses through business accounts. Freelancers, consultants, and gig workers with multiple clients often qualify easier with 1099 documentation.
Credit requirements start at 620, though 640+ gets better pricing. You'll need two years of 1099 history in the same field to show income stability.
Bank statement loans analyze deposits in your personal or business accounts. Lenders review 12-24 months of statements and calculate average monthly income, applying a standard expense ratio.
This program shines when you run most revenue through bank accounts but don't issue yourself 1099s. Business owners with LLCs, sole proprietors, and contractors who expense heavily typically get higher qualifying income here.
You'll need 12 months minimum of consistent deposits. Personal bank statements get a 50% expense deduction, business statements get 25-50% depending on the lender.
The core split is documentation style versus business structure. 1099 loans need formal tax documents; bank statement loans just need consistent deposits showing up monthly.
Income calculation differs dramatically. A Tracy contractor earning $180,000 in gross 1099 income might qualify with $120,000 after deductions. That same contractor using business bank statements could qualify with $108,000-$135,000 depending on the expense ratio applied.
Credit and down payment requirements stay similar. Both typically require 15-20% down for primary residences and 620-640 credit minimums, but bank statement loans sometimes accept slightly higher DTI ratios.
Choose 1099 loans if you're a freelancer receiving multiple 1099s with minimal business expenses. This path works when your tax returns already show strong income without heavy write-offs.
Bank statement loans fit better when you operate as an LLC, run significant business expenses, or don't issue yourself 1099 forms. Tracy business owners who write off equipment, vehicles, or home office expenses almost always qualify for more buying power with bank statements.
We run both calculations before you apply. Many self-employed borrowers assume one program fits them, then discover the other adds $75,000-$100,000 in purchasing power.
No, you pick one income verification method per loan application. We help you choose whichever produces stronger qualifying income for your situation.
Both work, but lenders apply different expense ratios. Personal accounts typically get 50% deductions while business accounts see 25-50% depending on the lender.
Both take 30-45 days typically. Bank statement loans sometimes move faster if your statements are clean and show consistent deposits without explanation needed.
Bank statement loans sometimes approve with 12 months. 1099 loans almost always require 24 months in the same line of work for approval.
Lenders want consistent monthly patterns. Large sporadic deposits trigger questions and may disqualify months from the income calculation, lowering your qualifying amount.