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in Compton, CA
Self-employed borrowers in Compton face the same problem: tax write-offs tank your income on paper. Both bank statement and P&L loans skip tax returns, but they verify income differently.
Contractors, real estate agents, and small business owners in LA County use these non-QM options when traditional underwriting kills their buying power. The right choice depends on how clean your books are and how much documentation you want to provide.
Bank statement loans pull income straight from 12 or 24 months of business or personal bank deposits. Underwriters apply a percentage (usually 50-75%) to your average monthly deposits to calculate qualifying income.
You don't need a CPA or formal bookkeeping. If cash flows through your accounts consistently, you can qualify. Most lenders require 10-20% down and accept credit scores as low as 620.
P&L loans require a CPA-prepared profit and loss statement covering 1-2 years. Your accountant signs off on income, and lenders verify it matches your business reality through bank statements or other docs.
This option works when you have organized books and a relationship with a licensed CPA. Credit score minimums sit around 620-640, and most lenders want 15-20% down depending on the property.
Bank statement loans cost less upfront because you skip CPA fees. P&L loans often get slightly better rates because a licensed accountant vouches for your income, which lenders see as less risky.
If your books are a mess or you mix personal and business expenses, bank statements win. If you already file detailed financials and work with a CPA, P&L statements can unlock lower pricing and higher loan amounts.
Use bank statements if you're a cash-heavy business without formal accounting, or if you need to close quickly without waiting for CPA prep. This fits contractors, service providers, and gig workers who track income loosely.
Choose P&L if you already maintain detailed books and have a CPA relationship. Real estate investors, established businesses, and anyone with complex income structures often get better terms this way. Rates vary by borrower profile and market conditions.
Yes, many lenders accept personal statements for self-employed income. They apply a lower percentage to deposits since personal accounts mix income with other money.
No, you skip tax returns entirely. The CPA-prepared P&L replaces tax documentation, though some lenders verify it with bank records.
P&L loans often qualify you for more because CPAs can document income sources bank statements miss. Bank statements only count verifiable deposits.
P&L loans sometimes price 0.25-0.50% lower due to CPA verification. Both cost more than conventional loans because of non-QM risk pricing.
Yes, if you provide the required CPA documentation. Most brokers start with bank statements and upgrade to P&L if it improves your approval.