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in Artesia, CA
Self-employed borrowers in Artesia face a choice: prove income with bank statements or a CPA-prepared P&L. Both are non-QM loans that skip tax returns, but they require different paperwork and suit different business structures.
Bank statement loans use 12-24 months of deposits to calculate income. P&L loans rely on a current profit and loss statement from your accountant. The right choice depends on how you run your books and what documentation you already have.
Bank statement loans calculate income from monthly deposits over 12 or 24 months. Lenders apply a percentage (usually 50-75%) to account for business expenses. This works well if you deposit most revenue into business accounts.
You'll need consistent deposits without major gaps. Personal and business accounts both work, though business accounts typically qualify for higher income calculations. Credit scores usually need to hit 620 minimum, with better rates above 680.
P&L loans use a current profit and loss statement prepared by a licensed CPA. The lender looks at net income from the most recent year or year-to-date period. This path works best if you already work with an accountant who maintains detailed books.
Your CPA must be licensed and willing to sign off on the statement. Some lenders also require a balance sheet. This option suits borrowers with complex business structures or those who write off most income for tax purposes.
Bank statement loans are faster and cheaper upfront since you don't need a CPA. You just gather statements from your bank. P&L loans cost more initially but may show higher income if your books are clean and you have significant business expenses.
The income calculation differs completely. Bank statements use gross deposits minus a standard percentage. P&L loans use actual net income after expenses. If you write off aggressively, P&L statements might show lower qualifying income than your bank deposits do.
Choose bank statements if you deposit most revenue, don't currently use a CPA, or need to close quickly. This path is simpler and works for sole proprietors and small businesses with straightforward cash flow. Most Artesia self-employed borrowers start here.
Go with P&L if you have complex business structures, already maintain detailed books with a CPA, or your bank deposits don't reflect true income. This works better for borrowers with significant legitimate business expenses or multiple revenue streams.
No, lenders pick one income documentation method per loan. You can't combine both to boost qualifying income.
Rates are similar since both are non-QM loans. Your credit score and down payment affect pricing more than documentation type.
Most lenders want at least two years in the same business or industry. Some accept one year with strong income and reserves.
Large gaps or inconsistent deposits hurt bank statement loans. A P&L might work better if your books show steady income despite uneven deposits.
Yes, but it restarts underwriting and delays closing. Pick the right path before you start the application process.