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in Dunsmuir, CA
Both loan types serve self-employed borrowers in Dunsmuir who can't use tax returns to qualify. The key difference is how you prove income: 1099 forms or raw bank deposits.
Most self-employed borrowers write off expenses that tank their taxable income. These non-QM options let you qualify on what you actually earn, not what you report to the IRS.
1099 loans use your 1099 forms from the past two years to calculate income. Lenders apply a multiplier to your gross 1099 income, typically 75-90% depending on your industry and expense profile.
You need steady 1099 income from at least two years of the same type of work. Clean credit above 640 and at least 15% down work for most borrowers. This route is cleanest when your 1099s tell a clear income story.
Bank statement loans analyze 12 or 24 months of business or personal bank deposits. Underwriters calculate average monthly deposits, then subtract a standard expense ratio of 30-50% to arrive at qualifying income.
You need consistent deposits and clean banking activity. Minimum 620 credit and 10-20% down depending on loan size and deposit patterns. This option works when your actual deposits exceed what 1099s show.
Bank statement loans catch income that 1099s miss: cash deposits, Venmo payments, and non-reportable revenue. If you show $80K in 1099s but deposit $150K annually, bank statements will qualify you for more house.
Credit and down payment requirements run slightly looser on bank statement loans. Documentation is heavier though—you'll provide every page of statements with explanations for large or irregular deposits. 1099 loans involve less paperwork once you submit the forms.
Choose 1099 loans if you receive most income through formal contractor agreements and your 1099s reflect your true earnings. This route moves faster with less scrutiny of individual transactions.
Pick bank statement loans when you have mixed income sources, cash revenue, or when business deposits significantly exceed what 1099s show. You'll need organized banking records and patience for underwriter questions about deposit sourcing.
Some lenders will combine both to maximize qualifying income. This works when 1099s cover part of your income and bank statements capture additional revenue streams.
Rates run similar on both since they're non-QM products. Your credit score and down payment affect pricing more than which income documentation you use.
Both require two years of self-employment in the same field. Bank statement loans use 12-24 months of deposits while 1099 loans need two years of forms.
Bank statement loans handle seasonal income better since they average monthly deposits. 1099 loans can work if your two-year average is strong despite seasonal dips.
Not always, but having one strengthens your file. Lenders care more about consistent income documentation than formal business registration.