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in Woodlake, CA
Both 1099 loans and bank statement loans solve the same problem for Woodlake self-employed borrowers: proving income without W-2s. The difference is how lenders verify what you actually make.
1099 loans use your tax forms. Bank statement loans use your deposits. Which route works better depends on how much you write off and how you run your business.
1099 loans pull income straight from your tax returns and 1099 forms. Lenders average your last two years of reported earnings to calculate qualifying income.
This works great if you claim most of your revenue without heavy write-offs. You need consistent 1099 income reported to the IRS and typically 620+ credit.
Rates vary by borrower profile and market conditions. Expect slightly higher rates than conventional loans since these are non-QM products.
Bank statement loans skip tax returns entirely. Lenders review 12 to 24 months of business or personal bank deposits to calculate your income.
The broker runs a percentage calculation on your deposits to account for business expenses. This captures income you earned but wrote off for tax purposes.
Rates vary by borrower profile and market conditions. These non-QM loans typically cost more than 1099 loans since documentation is less standardized.
The core split: 1099 loans reward borrowers who report income to the IRS while bank statement loans help those who maximize deductions. Your tax strategy determines which program shows higher qualifying income.
Documentation effort differs too. 1099 loans need tax returns and forms you already filed. Bank statement loans require organizing months of deposits and explaining any irregular transactions.
Credit requirements trend slightly stricter for bank statement loans. Most lenders want 640+ versus 620+ for 1099 programs since the income documentation carries more risk.
Choose 1099 loans if your tax returns show strong net income and you get most earnings on 1099 forms. This path costs less and closes faster with cleaner documentation.
Pick bank statement loans if you write off 40%+ of revenue or mix cash and check deposits that don't appear on 1099s. You'll qualify for more despite lower reported income.
Woodlake self-employed buyers often need to run both scenarios. We calculate qualifying income under each program to see which delivers better loan terms for your situation.
No. Lenders use one income verification method per loan application. You choose the program that shows higher qualifying income based on your documentation.
1099 loans typically price better since income verification is standardized through IRS forms. Bank statement loans carry higher risk and cost more.
Not always required but most lenders want proof you've been self-employed for two years. 1099 forms or bank statements showing regular deposits serve as evidence.
Both programs average your income over 12-24 months. Seasonal fluctuations are fine as long as deposits or 1099 totals show consistent annual earnings.
Rare but possible with bank statement loans if deposits are strong. 1099 loans almost always require two years of tax returns showing self-employment income.