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in Marysville, CA
Self-employed borrowers in Marysville face a common challenge: traditional lenders want W-2s you don't have. Both 1099 loans and bank statement loans solve this problem, but they verify your income differently.
Choosing the right option depends on how you receive income and what documentation you can easily provide. Understanding these differences helps you pick the path with the smoothest approval process.
1099 loans use your 1099 forms from clients to verify income. If you're an independent contractor receiving 1099s from multiple clients, this option directly matches your documentation.
Lenders typically review one to two years of 1099 forms to calculate your qualifying income. This approach works well when your 1099 income is consistent and well-documented.
These loans offer a straightforward path for contractors, consultants, and freelancers who already organize their 1099 forms for tax purposes. The documentation you file with the IRS becomes your income proof.
Bank statement loans analyze 12 to 24 months of your business or personal bank deposits to determine income. This method works regardless of how clients pay you or your business structure.
Lenders calculate your average monthly deposits, then apply deductions for business expenses. This flexibility helps borrowers whose income doesn't arrive via 1099s.
These loans suit business owners, sole proprietors, and self-employed professionals who might receive payments through various channels. Your actual cash flow matters more than specific tax forms.
The main difference is documentation: 1099 loans need your IRS forms, while bank statement loans need your deposit history. If you receive mostly 1099 income, that route often requires less explanation.
Bank statement loans offer more flexibility when your income comes from mixed sources or you run a business with significant expenses. They capture your true cash flow rather than just reported 1099 amounts.
Processing can differ too. 1099 loans typically move faster since the forms are standardized. Bank statement loans may take longer as lenders analyze individual transactions and calculate business expense ratios.
Rates vary by borrower profile and market conditions, but both programs generally price similarly since they're both non-QM products. Your credit score, down payment, and overall financial picture impact your rate more than the specific program.
Choose 1099 loans if most of your income arrives via 1099 forms and you keep those documents organized. This path offers the most direct match between your paperwork and lender requirements.
Pick bank statement loans if you own a business with mixed income sources, receive payments outside 1099s, or have significant business expenses that reduce your taxable income. This option looks at your actual deposits rather than tax reporting.
For Marysville borrowers working in agriculture, construction, or local services, bank statement loans often provide more flexibility. If you're a contractor primarily serving a few clients with clear 1099s, that specialized program might streamline your process.
Many self-employed borrowers qualify for both options. A local mortgage broker can review your specific documentation and recommend the path with better terms or faster approval for your situation.
You typically choose one program or the other, not both. However, lenders may ask for bank statements as supporting documentation even on a 1099 loan. Your broker will recommend the primary qualification method that works best.
Most lenders prefer two years of self-employment history, but some programs accept one year if you have strong compensating factors. Bank statement loans sometimes offer more flexibility for newer businesses.
Your qualifying income determines the loan amount, not the program type. Bank statement loans may calculate higher income if you have large deposits and reasonable expense ratios. The calculation method matters more than the program name.
Down payment requirements are typically similar for both, usually starting at 10-20% for non-QM loans. Your specific down payment depends on credit score, property type, and lender guidelines rather than whether you use 1099s or bank statements.
1099 loans often close slightly faster since the documentation is more standardized. Bank statement loans require more analysis of individual transactions. Expect 30-45 days for either, depending on your documentation quality.