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in Sonoma, CA
Both loan types serve self-employed borrowers in Sonoma who can't qualify conventionally. The main difference is which documents you use to prove income.
1099 loans work for contractors with clean tax returns. Bank statement loans help borrowers who write off most of their income or have complex business structures.
1099 loans use your tax forms to calculate qualifying income. Lenders look at your 1099s from the past two years and average your contractor earnings.
This works if you report strong net income on your taxes. You'll need two years of 1099 history with the same or increasing income to get approved.
Credit requirements typically start at 620. Expect slightly higher rates than conventional loans but lower than most non-QM options.
Bank statement loans bypass tax returns entirely. Lenders analyze 12 to 24 months of business or personal bank deposits to calculate income.
The underwriter looks at total deposits and applies an expense ratio. Most programs assume 50% expenses, meaning they count half your deposits as qualifying income.
You need consistent deposits over the review period. Minimum credit scores typically start at 640 for bank statement programs.
1099 loans require solid reported income on taxes. Bank statement loans work when you write off most earnings or show minimal net income.
Bank statement programs cost more. Rates run 1-2% higher than 1099 loans because lenders view them as riskier documentation.
Processing time differs too. 1099 loans close faster since tax forms are simpler to verify than months of bank deposits and business transactions.
Choose 1099 loans if your tax returns show strong net income. This path offers better rates and faster approval for contractors who don't maximize deductions.
Pick bank statement loans if you write off most income for tax purposes. Real estate agents, restaurant owners, and contractors with equipment depreciation often need this route.
Sonoma's wine industry creates many self-employed borrowers. Vineyard consultants and hospitality contractors often use 1099 loans, while restaurant owners typically need bank statements.
No. Lenders pick one income calculation method per loan. You'll qualify through either 1099 documentation or bank statements, not a combination of both.
1099 loans typically offer rates 1-2% lower than bank statement programs. The simpler documentation means less risk for lenders.
Yes for 1099 loans. Bank statement programs sometimes accept 12 months if deposits are strong and consistent throughout that period.
Absolutely. If your 1099 income is too low, we run your bank statements instead. Many Sonoma borrowers start with one and pivot to the other.
1099 loans typically close 5-7 days faster. Tax forms are quicker to verify than analyzing months of bank deposits and categorizing transactions.