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in Fairfield, CA
Self-employed borrowers in Fairfield face a choice between two non-QM paths that verify income differently. 1099 loans use your tax forms while bank statement loans look at deposits.
Both options work when traditional W-2 documentation won't fly. The right choice depends on how you run your business and what shows up on your returns versus your bank account.
1099 loans verify income through your tax forms—specifically 1099-MISC or 1099-NEC statements from clients. Lenders average your 1099 income over one or two years to determine what you qualify for.
This option works best if you claim most of your income and don't write off heavy business expenses. You need organized tax returns and consistent 1099 documentation from multiple clients or projects.
Credit requirements typically start at 620, though some lenders want 640 or higher. Down payments range from 10-20% depending on the loan amount and your overall borrower profile.
Bank statement loans analyze 12 to 24 months of business or personal bank deposits to calculate income. Lenders use 50-75% of average monthly deposits as qualifying income, depending on whether you provide business or personal statements.
This path makes sense when you write off significant expenses that reduce your taxable income. Your bank account shows the real cash flow even if your tax returns look lean after deductions.
Expect similar credit requirements—620 minimum with most lenders preferring 640 or above. Down payments typically start at 10-15% but can reach 20-25% for higher loan amounts or riskier profiles.
The core split is documentation style. 1099 loans need your tax forms and client payment records. Bank statement loans bypass tax returns entirely and focus on deposit patterns.
Income calculation differs dramatically. With 1099 loans, your full reported income counts. Bank statement loans discount deposits by 25-50% to account for business expenses not shown in your tax returns.
Bank statement loans often cost more—expect rates 0.50-1.00% higher than comparable 1099 loans. That premium pays for the added flexibility of not needing clean tax returns. Rates vary by borrower profile and market conditions.
Choose 1099 loans if your tax returns accurately reflect your income and you don't write off everything. This option costs less and keeps the process straightforward when your 1099s tell the right story.
Go with bank statement loans when your tax strategy prioritizes deductions over reported income. The higher rate is worth it if your returns show minimal profit but your bank account proves you earn solid money.
Fairfield borrowers often mix income types—maybe you have 1099 income plus rental deposits or business revenue. We can structure either loan to capture multiple streams and maximize your qualifying income.
No, lenders choose one verification method per loan. We pick whichever approach shows higher qualifying income for your situation.
They average 12-24 months of deposits, then apply 50-75% of that amount as qualifying income. Personal statements get a lower percentage than business accounts.
Most lenders want two years, but some accept one year if you worked in the same field before going independent. Documentation requirements matter more than exact timeline.
1099 loans typically close quicker because documentation is simpler. Bank statement loans need more underwriting review to analyze deposit patterns.
Yes, both work for purchase and refinance. Same income verification rules apply whether you're buying or pulling equity from an existing Fairfield property.