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in Farmersville, CA
Self-employed borrowers in Farmersville have two solid non-QM options when tax returns don't show enough income. Both skip traditional W-2 documentation, but they verify income in completely different ways.
1099 loans work for contractors with clean 1099 forms from consistent clients. Bank statement loans help business owners who write off most income or have complex revenue streams.
Most Farmersville ag contractors and local business owners qualify for one option but not both. The right choice depends on how your income is documented, not how much you earn.
1099 loans use your 1099 forms directly to prove income. Lenders typically want 12-24 months of 1099s from the same clients showing steady contractor income.
This works great for independent contractors with a few reliable clients. If you drive for logistics companies, do IT consulting, or run crews for ag operations, 1099s paint a clear income picture.
Credit requirements usually start at 620, though some lenders want 640. You'll need 10-20% down depending on the property type and your credit profile.
Bank statement loans analyze 12-24 months of business or personal bank deposits. Lenders calculate income from total deposits, then apply a percentage based on your business type.
This option shines for business owners who write off significant expenses. If your tax returns show $60k but your bank statements show $200k in deposits, you qualify on the higher amount.
Minimum credit usually starts at 620. Down payments range from 10-20% for primary homes, higher for investment properties. Rates run 1-2% above conventional loans.
1099 loans count your full 1099 income without deductions. Bank statement loans calculate income from deposits, usually applying a 50% expense ratio for business accounts.
Documentation differs completely. 1099 loans need clean contractor forms from established clients. Bank statements need consistent deposits without lots of transfers between accounts.
1099 loans close faster because the math is simpler. Bank statement loans take longer since underwriters analyze every deposit pattern and categorize business versus personal income.
Choose 1099 loans if you're an independent contractor with 2-4 steady clients. The income calculation is straightforward and approval is faster when your 1099 forms are consistent.
Pick bank statement loans if you own a business with significant write-offs. This works for Farmersville ag service providers, equipment rental operations, or retail businesses where tax returns don't reflect actual cash flow.
Some borrowers think bank statements are always easier, but messy deposits hurt you. If you move money between accounts often or mix business and personal funds, 1099 loans are cleaner.
Talk to a broker who handles both programs. We see which option gets you approved at better terms based on your specific documentation.
No, lenders use one income calculation method per loan. You pick the program that shows your income most favorably based on your documentation.
Rates vary by borrower profile and market conditions. Both typically run 1-2% above conventional loans, with the actual rate depending on your credit and down payment.
Yes, most lenders want 1-2 years of personal tax returns even though they're not used for income calculation. Returns help verify you're filing and show other financial obligations.
Lenders average your 1099 income over 12-24 months. A recent drop can hurt, but consistent income before that helps stabilize the average calculation.
Yes, as long as you have 12-24 months of statements. Lenders accept personal accounts for sole proprietors or business accounts for LLCs and corporations.