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in Baldwin Park, CA
Both options help self-employed borrowers qualify without tax returns. The real question is which documentation you already have and how much income you need to show.
Baldwin Park buyers with solid deposits typically prefer bank statements. Those who want maximum income from a CPA'd P&L lean the other way.
Bank statement loans calculate income from business deposits over 12 or 24 months. Lenders review your statements to see cash flow patterns and average what comes in.
You avoid the tax return trap where write-offs crush your qualifying income. The lender sees what actually hits your account, not what you reported to the IRS.
P&L loans rely on a CPA-prepared profit and loss statement covering 12-24 months. Your accountant documents revenue minus expenses to show net business income.
This route works when your bank deposits don't tell the full story. Maybe you have large transfers between accounts or inconsistent deposit patterns that confuse underwriters.
Bank statements require no CPA involvement—just upload your statements and go. P&L loans need a licensed CPA to prepare formal financials, which costs $500-1500 and adds two weeks.
Income calculation differs sharply. Bank statement lenders use 50-100% of deposits depending on business type. P&L loans use the bottom-line net income your CPA calculates.
Rates vary by borrower profile and market conditions. Bank statement loans usually price slightly better because documentation is simpler. P&L loans add about 0.25-0.50% for the extra complexity.
Choose bank statements if your deposits are clean and consistent. This works for contractors, consultants, and small business owners with straightforward cash flow in one or two accounts.
Go with P&L if your deposits look messy—lots of transfers, reimbursements, or equipment purchases that inflate deposit totals. Also pick P&L when your CPA can engineer higher net income than raw deposits would show.
Yes, if you're a sole proprietor or single-member LLC. Many self-employed borrowers run business income through personal accounts.
No, any licensed CPA works. They must be independent—family members don't qualify as your preparer for mortgage purposes.
Both typically require 10-20% down depending on credit score. Documentation type doesn't change down payment—credit and property type do.
Yes, but it restarts underwriting and adds 2-3 weeks. Get the P&L prepared before applying if you think you'll need it.
Bank statement loans require them. P&L loans use the CPA statement instead, though lenders may still review bank activity for reserves.