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in Mendota, CA
Both bank statement and P&L loans serve self-employed borrowers who can't prove income through W-2s. The difference comes down to how you document what you earn and how lenders calculate your qualifying income.
Mendota's agricultural and small business economy means many borrowers need these non-QM options. Your choice depends on how you run your books and what documentation you already maintain.
Bank statement loans analyze 12 or 24 months of business or personal bank deposits. Lenders calculate income by taking total deposits minus any transfers or non-income items, then applying an expense ratio between 25% and 50%.
You don't need a CPA or formal financials. If your business runs through bank accounts with consistent deposits, this path works. Expect rates 1-2% higher than conventional loans and minimum credit scores around 620.
P&L statement loans require a CPA-prepared profit and loss statement covering 12 or 24 months. Lenders use the net profit figure directly, without applying expense ratios like bank statement programs do.
This route works if you already maintain formal books and work with a CPA. You'll typically see slightly better rates than bank statement loans since the documentation is more traditional. Still expect non-QM pricing above conventional mortgages.
The income calculation matters most. Bank statement loans apply expense ratios that reduce your qualifying income. If your P&L shows higher net profit than your bank deposits after expense ratios, the P&L route qualifies you for more.
Documentation cost differs too. Bank statements cost nothing beyond downloading PDFs. P&L statements require paying a CPA several hundred to a few thousand dollars depending on your business complexity.
Choose bank statements if you don't have a CPA relationship or formal books. Most contractors, gig workers, and small operators in Mendota go this route. You'll qualify for less income but avoid preparation costs.
Pick P&L loans if you already maintain financials and work with a CPA. The net profit calculation often qualifies you for more house, and rates run slightly lower. This fits established businesses with formal accounting already in place.
Yes, most bank statement programs accept personal accounts if your business income runs through them. Lenders separate business deposits from personal transfers during underwriting.
Just CPA-prepared works for most lenders. Full audits aren't required unless you're borrowing jumbo amounts over $2 million.
P&L loans typically price 0.25-0.5% better because the documentation is more formal. Both run 1-2% above conventional mortgage rates.
Yes, but expect delays while your CPA prepares statements. Most borrowers pick one path upfront to avoid timeline issues.
Both work for purchases and refinances. Cash-out refinance limits may be tighter on bank statement programs depending on the lender.