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in Dixon, CA
Self-employed borrowers in Dixon have two strong options for mortgage financing when W-2 income isn't in the picture. Both 1099 and bank statement loans let you qualify without traditional pay stubs, but they verify income differently.
The right choice depends on how you receive income and what documentation you can easily provide. Most borrowers find one option clearly better for their specific tax situation.
1099 loans use your 1099 forms from clients to prove income, making them ideal for independent contractors who receive 1099-MISC or 1099-NEC forms. You typically need one to two years of 1099 documentation showing consistent earnings.
Lenders calculate your qualifying income by averaging your 1099 amounts and applying standard deductions. This works well if you get most of your income through a few major clients who issue proper tax forms.
Credit requirements usually start around 620, though better rates require 680 or higher. You need full income documentation from every client who pays you, which can get complicated if you have many small income sources.
Bank statement loans review 12 to 24 months of your business or personal bank deposits to calculate income. Lenders look at total deposits, subtract transfers and non-income items, then apply expense ratios to estimate your actual earnings.
This option works for any self-employed borrower regardless of how clients pay you. Cash deposits, Venmo payments, wire transfers—everything counts if it shows up in your statements.
You avoid the hassle of tracking down 1099 forms from dozens of small clients. Most programs use either 50% or 75% of deposits as qualifying income depending on whether you use business or personal accounts.
The biggest difference is documentation burden. 1099 loans require you to gather forms from every client, while bank statement loans need only your bank records. If you have 50 small clients, bank statements win easily.
Income calculation methods differ significantly. 1099 loans use reported income with standard deductions, giving you more qualifying power if your tax forms show strong earnings. Bank statement programs apply fixed expense percentages that might overestimate or underestimate your actual costs.
Both programs charge higher rates than conventional loans since they're non-QM products. Expect rates 1-2% above conforming loan rates, with exact pricing based on credit score, down payment, and loan amount. Rate differences between the two programs are usually minimal for qualified borrowers.
Choose 1099 loans if you receive most income from a handful of established clients who properly issue tax forms. This works great for consultants, contracted professionals, and specialized service providers with predictable client relationships.
Go with bank statement loans if you have many small clients, receive payments through apps, or operate a cash-heavy business. This option also helps borrowers who write off aggressive deductions that make their 1099 income look artificially low.
Dixon's proximity to Sacramento and the Bay Area means many residents do contract work for larger companies. If those firms send you 1099s, that route is simpler. But gig workers, tradespeople, and small business owners typically find bank statements easier to document.
Most lenders require you to pick one income documentation method per loan application. You can't mix verification types to boost your qualifying income on a single loan.
It depends on your specific income and expenses. 1099 loans often qualify higher income if your forms show strong earnings, while bank statements work better if you write off heavy deductions.
Both programs typically require 10-20% down, with better rates at 20% or higher. Down payment requirements are similar between 1099 and bank statement loans for comparable borrower profiles.
Bank statement loans often close faster since you're only gathering your own records. 1099 loans can drag if you need to chase down forms from multiple clients or former employers.
1099 loans rely on your tax forms, so low reported income hurts qualification. Bank statement programs focus on deposits, making them better if you show low taxable income but high cash flow.