Program Comparison Overview

Comparing bank statement, 1099, P&L, and asset depletion mortgage programs to find the right fit

The four specialty mortgage programs for self-employed borrowers take different approaches to documenting and calculating income. Understanding the core differences helps you identify which program fits your situation—and how to shop effectively within that program.

Side-by-Side Comparison

Factor	Bank Statement	1099	P&L	Asset Depletion
Income source	Bank deposits	1099 forms	CPA financials	Liquid assets
CPA required	No (helps)	No (helps)	Yes	No
Expense factor	Yes (10-50%+)	Sometimes (0-25%)	No (actual expenses)	N/A
Statement period	12 or 24 months	1 or 2 years of 1099s	12 or 24 months	Recent statements
Best for	Business owners with consistent deposits	Independent contractors and commission earners	Borrowers with clean books and low actual expenses	High-net-worth borrowers with limited income documentation

Key Variables Within Each Program

Bank Statement Loans

Programs vary most significantly on expense factor methodology—the single biggest lever for qualifying income.

Variable	Range Across Lenders
Statement period	12 or 24 months
Expense factor	10-50%+ depending on business type
Minimum credit score	620-700
Maximum LTV	80-90%
Maximum DTI	43-55%
Maximum loan amount	$2M-$10M+

A lender applying a 30% expense factor versus 50% can mean tens of thousands of dollars in additional qualifying income on the same deposit history.

1099 Loans

Key variables are whether the lender applies an expense factor and how they handle multiple 1099 sources or income variability.

Variable	Range Across Lenders
1099 period	1 or 2 years
Expense factor	0-25%
Eligible 1099 types	NEC, MISC, K (varies)
Bank statement cross-verification	Required by some, not others
Minimum credit score	620-700

Some lenders use 100% of gross 1099 income with no expense deduction. Others apply a modest factor. Asking upfront is essential.

P&L Loans

Because income comes directly from the P&L net profit figure, the main variables are the qualifying period, whether the lender requires a reviewed or audited statement, and how they treat the relationship between the P&L and bank statements.

Variable	Range Across Lenders
P&L period	12 or 24 months
CPA requirements	Prepared vs. reviewed vs. audited
Bank statement supplement	2-3 months required by most
Minimum credit score	620-700
Maximum LTV	80-90%

Asset Depletion Loans

The depletion period is the most critical variable—it has a larger impact on qualifying income than any other single factor across all four programs.

Variable	Range Across Lenders
Depletion period	60-360 months
Investment account discount	70-80% of value
Retirement account discount	60-70% of value
Minimum eligible assets	$500,000-$1,000,000+
Maximum LTV	65-75%

A lender using a 120-month depletion period produces three times the monthly qualifying income of one using 360 months on the same asset base.

Choosing Between Programs

Some borrowers qualify under more than one program. When that’s the case, the decision comes down to which method produces the highest qualifying income:

• Bank statements vs. 1099s — If you have both deposit history and 1099 forms, calculate which yields more income after expense factor adjustments
• Bank statements vs. P&L — If your actual expense ratio is lower than what bank statement lenders assign for your industry, a P&L loan may qualify you for more
• Income programs vs. asset depletion — If earned income alone doesn’t qualify you but you have significant liquid assets, asset depletion can supplement or replace income documentation

Questions to Ask Lenders

For any program:

• What’s the maximum LTV at my loan amount?
• What reserves are required for my scenario?
• What rate adjustments apply to my credit score, LTV, and property type?
• Do you offer interest-only options?

For bank statement loans specifically:

• What expense factor applies to my business type?
• Can a CPA letter or P&L reduce the expense factor?
• Can I use 12-month statements, or is 24 months required?

For 1099 loans specifically:

• Do you apply an expense factor to 1099 income?
• Which 1099 types do you accept?
• Do you require bank statement cross-verification?

For P&L loans specifically:

• Do you require a reviewed or audited P&L, or is a prepared statement sufficient?
• How many months of bank statements are required alongside the P&L?
• What happens if the P&L and tax return show different income?

For asset depletion loans specifically:

• What depletion period do you use?
• How do you discount investment and retirement accounts?
• Can asset depletion income be combined with other qualifying income?

Getting Multiple Quotes

None of these programs are commoditized like conventional mortgages. Programs differ enough—within each type and across lender options—that shopping multiple lenders is essential. Request a full loan estimate from at least three lenders and compare:

• Qualifying income calculation (the most important factor)
• Interest rate and APR
• Required down payment
• Closing costs and fees
• Reserve requirements

The lender with the lowest rate isn’t always the best choice if their methodology produces a lower qualifying income than you need.