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in McFarland, CA
Self-employed borrowers in McFarland have two strong pathways to mortgage approval when traditional tax returns don't show enough income. Both bank statement loans and profit & loss statement loans help business owners qualify based on their actual cash flow rather than taxable income.
These non-QM options serve Kern County entrepreneurs, independent contractors, and small business owners who write off significant expenses. Understanding which documentation method works best for your situation can make the difference in securing your home loan.
Bank statement loans use 12 to 24 months of personal or business bank statements to calculate your income. Lenders review deposits to determine qualifying income, typically using 50-75% of total deposits depending on your business type.
This option works well if you receive consistent deposits and maintain organized banking records. You avoid the cost of CPA preparation, making it faster and more straightforward for many self-employed McFarland residents.
Rates vary by borrower profile and market conditions. Most lenders require at least 10-20% down payment and a credit score of 620 or higher.
Profit & loss statement loans require a CPA-prepared P&L covering 12 to 24 months of business activity. This formal financial statement shows your revenue, expenses, and net profit in a standardized format that lenders trust.
This approach benefits borrowers whose bank statements show irregular deposits or complex transactions. A CPA can present your income more favorably by accounting for business cycles and seasonal variations common in Kern County industries.
Rates vary by borrower profile and market conditions. Down payment requirements typically start at 10-20%, with credit score minimums around 620-640.
The main difference lies in documentation complexity and cost. Bank statement loans let you submit existing records directly, while P&L loans require hiring a CPA to prepare formal statements, which can cost several hundred dollars.
Bank statement loans work faster since you're using documents you already have. P&L loans take longer due to CPA preparation time but may result in higher qualifying income if your CPA can properly account for business deductions and expenses.
Both options accept lower documentation than traditional mortgages. Bank statements show raw cash flow, while P&L statements provide a more refined financial picture that may benefit borrowers with complex business structures.
Choose bank statement loans if you have straightforward deposits, want to close quickly, and prefer handling documentation yourself. This works well for freelancers, gig workers, and service providers with consistent monthly income patterns.
Opt for P&L statement loans if your bank statements show irregular deposits, you have significant business expenses, or your income varies seasonally. The CPA preparation cost pays off when professional presentation increases your qualifying income.
Many McFarland borrowers start by discussing both options with their mortgage broker. Your specific business structure, income consistency, and timeline all factor into which path makes the most sense for your home purchase.
Generally, lenders require one documentation method or the other, not both. Your loan officer will recommend the approach that best suits your income pattern and maximizes your qualifying amount.
Most bank statement loan programs require 12 to 24 months of consecutive statements. The longer the history you provide, the more confident lenders feel about your income consistency.
Yes, for P&L statement loans, your CPA must hold a valid license. Many lenders also require the CPA to sign a certification letter confirming the accuracy of the prepared financial statements.
Rates vary by borrower profile and market conditions. Neither option consistently offers better rates—your credit score, down payment, and overall financial profile matter more than documentation type.
Switching documentation methods mid-application typically restarts the underwriting process. It's best to choose the right option upfront based on your broker's recommendation and your financial situation.