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in Cotati, CA
Both 1099 and bank statement loans serve self-employed borrowers in Cotati, but they verify income differently. Your documentation type — not your business structure — determines which path gets you approved faster.
Most freelancers and contractors I work with qualify for one but not both. The right choice depends on how clean your 1099s look versus what hits your bank account each month.
1099 loans use your actual 1099 forms to calculate qualifying income. Lenders average 12-24 months of documented contractor payments, then apply standard debt-to-income ratios.
This works best when you have consistent 1099 income from a few reliable clients. If your forms show steady payments without major year-to-year swings, underwriting is straightforward.
You'll need 10-20% down for most properties in Cotati. Credit minimums start around 620, though better scores unlock better pricing and lower down payment requirements.
Bank statement loans analyze 12-24 months of personal or business bank deposits. Underwriters apply expense ratios to estimate net income — typically 50% for personal accounts, 25-75% for business accounts.
This path shines when your actual deposits exceed what your 1099s show. Many Sonoma County business owners write off significant expenses, making bank statements a cleaner income picture.
Expect 10-20% down and similar credit requirements to 1099 loans. The trade-off: slightly higher rates in exchange for easier income documentation when your tax returns look thin.
The core split: 1099 loans need official tax documents while bank statement loans look at actual cash flow. If you aggressively minimize taxable income, your 1099s might not reflect true earning power.
Bank statement loans give you more control over the narrative. Inconsistent 1099 amounts that would tank a traditional application often don't matter when your deposits show reliable monthly income.
Rates typically run within 0.25% of each other. Bank statement loans edge slightly higher due to increased underwriting complexity, but the difference rarely changes affordability math for Cotati properties.
Choose 1099 loans when your forms accurately reflect income and you have consistent contractor relationships. This route processes faster and requires less documentation gathering.
Pick bank statement loans if you write off 30%+ of gross income or receive payments that don't generate 1099s. Also better for business owners mixing revenue streams or handling cash-heavy operations.
I run approval scenarios for both programs when income documentation could go either way. Sometimes the bank statement approach qualifies you for $50K-100K more purchase power in Cotati's market.
No, lenders pick one income verification method per loan. We choose whichever approach qualifies you for the highest amount with the cleanest approval path.
Rates run 0.5-1.5% higher than conventional loans due to non-QM status. The trade-off: approval without W-2s or full tax returns that show sufficient income.
Most lenders require 12-24 months of history. Longer track records strengthen your application and sometimes improve pricing on Cotati properties.
Lenders average the period, but significant declines trigger questions. Bank statement loans avoid this issue by focusing on recent deposit patterns instead of year-over-year comparisons.
Yes, both work for purchases and refinances. Rate-and-term refinances often require less documentation than cash-out scenarios regardless of loan type.