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in Exeter, CA
Self-employed borrowers in Exeter have two main paths to mortgage approval without W-2s. Both 1099 loans and bank statement loans skip traditional tax returns, but they verify income differently.
Your business structure and how you pay yourself determine which option works better. Most borrowers qualify for one but not both based on their income documentation.
These non-QM loans cost more than conventional financing but open doors for entrepreneurs who can't show enough taxable income. Rates vary by borrower profile and market conditions.
1099 loans use your annual 1099 forms to prove income. Lenders typically average two years of 1099 income without the tax return deductions that hurt most self-employed borrowers.
This works best for contractors who get consistent 1099s from clients. You need clean documentation showing regular income streams from established business relationships.
The catch is you must actually receive 1099 forms. If clients pay you via direct deposit or check without issuing 1099s, this loan won't work even if you report the income.
Bank statement loans analyze 12 to 24 months of business or personal bank deposits. Lenders calculate your income by reviewing deposits and applying expense ratios based on your industry.
This option works for any self-employed borrower with consistent deposits. You don't need 1099s or formal documentation from clients—just regular money flowing into your accounts.
Most lenders use a 50% expense ratio, meaning they count half your deposits as income. Some industries get better treatment with lower expense assumptions that boost qualifying income.
The biggest split comes down to documentation you already have. 1099 loans need formal tax documents from clients. Bank statement loans just need deposit history.
Income calculation varies drastically between the two. 1099 loans use your gross 1099 income. Bank statement loans discount deposits by 25-50% to account for business expenses.
Credit and down payment requirements run similar for both options. Expect 620-640 minimum credit scores and 10-20% down depending on the property and your financial profile.
Bank statement loans offer more flexibility but often cost slightly more. The extra underwriting work and risk assessment translates to higher rates than 1099 products.
Choose 1099 loans if you get formal 1099s and want to use your full gross income. This works for contractors serving established businesses that properly document payments.
Pick bank statement loans if clients don't issue 1099s, you run cash through your accounts irregularly, or you operate as an LLC or S-corp. This fits most small business owners.
Run the numbers on both if you have 1099s available. Sometimes the expense ratio on bank statement loans still gives you higher qualifying income than your 1099 totals.
Most Exeter borrowers with agricultural or service businesses end up in bank statement loans. The flexibility around deposit sources beats the documentation requirements of 1099 products.
No, you pick one income documentation method. Lenders structure the loan around either 1099 analysis or bank statement review, not a combination of both.
1099 loans typically close quicker because the income calculation is simpler. Bank statement loans need more underwriting time to analyze deposit patterns and verify sources.
Some lenders want to see returns but don't use them for income calculation. They check for tax liens and verify you're filing, not to qualify your income.
Most lenders require 620-640 minimum for both programs. Higher scores above 680 unlock better rates and lower down payment requirements.
Yes, if business income runs through personal accounts. Lenders just need to see consistent deposits they can trace to your self-employment activity.
Rates vary by borrower profile and market conditions. Generally 1099 loans price slightly better due to cleaner documentation, but your specific situation determines the actual cost.