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in Orland, CA
Both options solve the same problem: getting a mortgage when tax returns don't show your real income. The difference is what paperwork your lender uses to prove you can afford the loan.
In Orland's agricultural and small business economy, most self-employed borrowers find one route significantly easier than the other. Your business structure and how you manage your books determine which path closes faster.
Bank statement loans pull income directly from your business deposits. Lenders review 12 or 24 months of statements and calculate revenue based on what actually hit your account.
You don't need a CPA or formal books. Most lenders apply a 50% expense ratio, meaning they count half your deposits as qualifying income. Personal or business accounts both work.
P&L loans require a CPA-prepared profit and loss statement covering 12-24 months. Your accountant signs off that the numbers are accurate based on your business records.
Lenders use the net profit figure from your P&L. This route works when your accounting is clean and your CPA relationship is solid. It often qualifies you for higher loan amounts than bank statements.
Bank statements are faster and simpler but cap your qualifying income at 50% of deposits. P&L statements show true profitability but need a licensed CPA willing to sign.
Rates are similar on both programs. The real split is whether you keep organized books. Orland business owners without formal accounting almost always use bank statements. Those with CPAs on retainer often qualify for more with P&L.
Use bank statements if you don't have a CPA or your books are informal. It's the default for most solo operators, contractors, and small business owners who run lean operations.
Choose P&L if you have formal accounting and your net profit exceeds 50% of revenue. Farm operators with significant equipment depreciation often show better income on P&L than bank statements.
No. Lenders require you to pick one income documentation method. You can't mix sources to increase qualifying income.
Most lenders accept 12 months. Using 24 months can strengthen your file if income fluctuates seasonally.
Switch to bank statements. Some CPAs avoid signing loan documents due to liability concerns.
No. Both typically require 620-640 minimum credit scores and similar down payment amounts.
Yes. Lenders will combine deposits from all business accounts you provide during the 12 or 24 month period.