Loading
in Dorris, CA
Self-employed borrowers in Dorris face a choice between two non-QM options. Both bypass traditional W-2 verification, but they work differently.
1099 loans use tax documents to prove income. Bank statement loans skip tax returns entirely and analyze deposits instead.
Your choice depends on how you structure your business income and what documents tell the cleanest story. Many self-employed borrowers in Siskiyou County qualify for one but not both.
1099 loans verify income through your 1099 forms and tax returns. Lenders calculate qualifying income from what you actually reported to the IRS.
This works well if you don't write off most of your revenue. Contractors who show strong taxable income on Schedule C qualify easily.
You'll need two years of tax returns and recent 1099 forms. Credit minimums typically start at 620, though some lenders require 640.
Bank statement loans ignore tax returns completely. Lenders analyze 12 or 24 months of business or personal bank statements instead.
They calculate income from deposits, then apply an expense factor. This captures revenue before write-offs hit your tax return.
Most lenders require 20% down and 640+ credit. The extra documentation work pays off if your tax returns show low income due to business deductions.
The core difference is what counts as income. 1099 loans use taxable income after deductions. Bank statement loans use gross deposits before expenses.
If you write off 40% of your revenue for vehicles, home office, and equipment, bank statement loans show higher qualifying income. If you report most income to the IRS, 1099 loans cost less.
Bank statement loans typically carry higher rates because lenders assume more risk without tax verification. Expect 0.5% to 1.5% more than 1099 loan rates.
Choose 1099 loans if your tax returns show steady income and you don't max out business deductions. You'll get better rates and simpler underwriting.
Go with bank statement loans if heavy write-offs tank your taxable income but your deposits prove strong cash flow. The rate premium beats getting denied.
Some Dorris borrowers switch between options based on recent tax years. A bad tax year might push you to bank statements even if 1099 loans worked before.
Most lenders accept either personal or business statements, but not a mix. Business statements typically show cleaner income without personal expenses muddying the picture.
Both can go as low as 10-15% down with strong credit. Bank statement loans more commonly require 20% because lenders see them as higher risk without tax verification.
Lenders average your two most recent years. Big swings hurt qualification less on bank statement loans since they focus on recent monthly deposits rather than annual totals.
Yes, if your tax returns improve. Many Dorris borrowers refinance to conventional loans once they show two years of consistent reported income.
1099 loans typically close 3-5 days faster. Bank statement underwriting requires more analysis of deposit patterns and sourcing irregular transactions.