Bank statement loan vs. 1099 loan
Both programs exist for the same person — an independent earner whose tax returns understate real cash flow — but they read different evidence. A bank statement loan reconstructs income from 12–24 months of deposits with an expense factor applied. A 1099 program adds up the totals on your 1099 forms, usually applying a smaller haircut (often around 10%) because the forms already show gross contractor revenue.
The practical difference: 1099 programs suit contractors whose income arrives as clean, reported 1099s from a few payers. Bank statement programs suit business owners with many revenue streams, cash-adjacent deposits, or income that never generates a 1099 at all.
Side by side
| Factor | Bank statement loan | 1099 loan |
|---|---|---|
| Qualifying income | 12–24 months of deposits × (1 − expense factor) | 1099 totals (1–2 years), typically ~90% credited |
| Best evidence | Consistent monthly deposits | Clean 1099-NEC/1099-K forms from a few payers |
| Down payment | 10–20% typical | 10–20% typical |
| Minimum credit | 620–660 (best pricing 700+) | 620–660 (best pricing 700+) |
| Tax returns required | No | No (1099 forms + often YTD proof instead) |
| Best when | Many income streams or deposits tell the real story | One or a few clients report your full revenue on 1099s |
Figures are representative ranges, not quotes, and vary by lender. Read the full guides: Bank statement loan · 1099 loan.
Who should pick bank statement loan
Business owners with multiple revenue sources, platform payouts, or deposits that outrun what any single form reports — and the bookkeeping hygiene to explain them.
Who should pick 1099 loan
Contractors and freelancers whose work is fully captured on one or two 1099s and who want a simpler file with fewer documents to assemble.
Bottom line
Still deciding? Take the 5-question loan quiz, compare every option on the loan types page, or size a purchase with the affordability calculator.
FAQ
Generally you pick one documentation path per program — lenders don't blend deposit-derived and 1099-derived income for the same earnings. Some borrowers do pair a 1099-documented income with a co-borrower's differently-documented income; that's a lender-by-lender conversation.
Pricing is similar — both are non-QM programs typically 0.75–2% above conventional rates. That spread is an illustrative editorial estimate, not a quoted rate. The bigger cost difference usually comes from your credit score, down payment, and reserves rather than from which of the two documentation types you choose.
Educational information only — not financial advice, and not a quote, pre-approval, or offer of credit. Mortgage Merlin is a publisher, not a lender or broker.