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in Hawaiian Gardens, CA
Both bank statement and P&L loans help self-employed borrowers in Hawaiian Gardens qualify without tax returns. The difference comes down to how you document income and which route matches your business structure.
Most brokers push one over the other, but the right choice depends on your banking habits and CPA relationship. Here's what actually separates these two non-QM options.
Bank statement loans calculate income from 12 or 24 months of business or personal bank deposits. Lenders average your monthly deposits and apply an expense ratio—typically 25% to 50%—to determine qualifying income.
This works best if you run most revenue through one or two accounts. You need consistent deposits and clean statements without frequent NSFs or large unexplained transfers.
Credit requirements start at 620, though most lenders prefer 660 or higher. Expect 10-20% down and rates 1-3 points above conventional depending on your deposit patterns.
P&L loans use a CPA-prepared profit and loss statement—usually year-to-date plus one or two prior years. Your accountant's P&L shows net business income, which lenders use directly for qualifying.
This route works if you already prepare detailed P&Ls for your business. The CPA must be licensed, and most lenders verify the preparer's credentials before approval.
Credit and down payment requirements mirror bank statement loans—620 minimum, 10-20% down. Rates typically run slightly lower because P&L statements provide more detailed income breakdowns.
Bank statement loans look at gross deposits minus an expense factor. P&L loans use your accountant's net income calculation, which is usually lower than deposit-based calculations.
If you write off heavy expenses, bank statements often qualify you for more. If your P&L shows strong net income but deposits are messy, the P&L route wins.
Documentation effort matters too. Bank statements just need PDFs from your account. P&Ls require an active CPA relationship and formal financial statements.
Choose bank statement loans if you don't work with a CPA regularly or if heavy write-offs lower your net income below actual cash flow. Also go this route if your deposits show consistent patterns but your books are informal.
Pick P&L loans if you already prepare detailed financials and your net income accurately reflects what you earn. This works especially well for established businesses with formal accounting systems.
In Hawaiian Gardens, I see more sole proprietors and contractors use bank statements. Established retail or service businesses with bookkeepers tend toward P&L documentation.
Yes, many lenders accept personal statements if most business income flows through personal accounts. You'll need a letter explaining why business and personal deposits mix.
The CPA must hold an active license in any U.S. state. California license isn't required, but lenders verify credentials through state boards.
Bank statement loans typically close 3-5 days faster because you don't need CPA coordination. Both average 25-35 days total once documents are in.
Yes, but it restarts underwriting timelines. Better to choose upfront based on which documentation you can provide cleanest and fastest.
Both work up to $3-4 million depending on the lender. Bank statement loans sometimes cap lower on jumbo amounts—check specific lender overlays.
P&L loans typically price 0.25-0.5% lower at higher credit scores. The detailed income breakdown reduces lender risk compared to deposit averaging.