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. 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.