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in Lancaster, CA
Both bank statement and P&L loans solve the same problem: getting approved when your tax returns don't reflect your true income. The difference is how lenders verify what you actually make.
Most self-employed borrowers in Lancaster qualify for both options. Your choice depends on whether you want to provide bank statements or pay a CPA to prepare formal financials.
Bank statement loans analyze deposits over 12 or 24 months to calculate your average monthly income. Lenders apply a percentage (usually 50% for sole proprietors, 25% for corporations) to account for business expenses.
You don't need a CPA or formal bookkeeping. Just upload statements from your business account and lenders do the math. Most borrowers choose 24 months because it smooths out seasonal fluctuations.
Minimum credit scores run 620-640 depending on the lender. Down payments start at 10% but most deals require 15-20% for competitive rates.
P&L loans use a CPA-prepared profit and loss statement from the most recent 12 months. Some lenders also want a balance sheet. The income shown on your P&L becomes your qualifying income.
This route works when you have clean books and want full credit for your net profit. Lenders verify the CPA's license and may call to confirm they prepared the statement.
Credit and down payment requirements match bank statement loans: 620-640 minimum score, 10-20% down. Rates are typically identical since both are non-QM products.
The income calculation differs dramatically. Bank statement lenders apply a fixed percentage to deposits, which can understate your actual profit. P&L lenders use the net income your CPA calculates, which is often higher.
Documentation requirements flip the script. Bank statements are simple but you need months of them. P&L loans require one formal statement but you must have a CPA relationship and clean bookkeeping.
Qualification timeline matters too. Bank statement loans close in 3-4 weeks once you upload statements. P&L loans take longer if your CPA needs time to prepare current financials.
Choose bank statements if you don't have a CPA relationship or your books aren't current. This route works for contractors, Uber drivers, real estate agents, and anyone with regular deposits who writes off heavy expenses.
Choose P&L if you already prepare financials for your business and your net profit is strong. This option makes sense for established businesses with bookkeepers, especially if the 50% bank statement calculation undervalues your income.
Both loans handle Lancaster's market equally well. Rates vary by borrower profile and market conditions, but expect similar pricing between the two programs. The real difference is which documentation path fits your business setup.
Yes, lenders accept personal account statements if that's where your business income deposits. Just expect them to scrutinize which deposits count as income versus transfers or reimbursements.
No, any licensed CPA works as long as lenders can verify their credentials. Most lenders call the CPA directly to confirm they prepared your P&L statement.
Rates are nearly identical since both are non-QM products. Your credit score, down payment, and property type affect pricing more than which income verification method you choose.
Yes, but it restarts underwriting. Some borrowers try bank statements first and switch to P&L if the income calculation comes up short.
Yes, both programs allow investment property purchases. Expect higher down payments (typically 20-25%) and slightly higher rates compared to primary residence loans.