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in Lomita, CA
Self-employed buyers in Lomita face a choice: prove income with bank statements or P&L statements. Both skip the traditional W-2 path, but they verify earnings differently and serve distinct business models.
Your documentation timeline and business structure determine which loan closes faster. Most borrowers qualify for one option clearly over the other based on how they manage their books.
Bank statement loans calculate income from 12 or 24 months of business or personal bank deposits. Lenders average your deposits and apply an expense ratio, typically 25% to 50%, depending on your industry.
You don't need a CPA or formal bookkeeping. This works best for borrowers with consistent deposits who write off most income on tax returns. Approval can happen in 3 to 4 weeks with clean statements.
P&L loans use a CPA-prepared profit and loss statement covering 12 to 24 months of business activity. The CPA must be licensed and sign the documents. Lenders verify the CPA's credentials and sometimes request supporting financial records.
This route shows higher income if your P&L reflects strong net profit. It's ideal for businesses with formal accounting systems and established CPA relationships. Expect underwriting to take 4 to 5 weeks due to CPA verification steps.
Bank statement loans move faster and skip the CPA requirement. P&L loans often qualify you for higher loan amounts if your net profit exceeds what bank deposits would show after lender expense deductions.
Bank statements work for sole proprietors with simple cash flow. P&L statements favor LLCs, S-corps, and businesses with clean books. Rates vary by borrower profile and market conditions, but both typically price 1 to 2 points above conventional loans.
Choose bank statements if you don't have a CPA relationship or if your deposits clearly support your purchase price. Choose P&L if your accountant already prepares detailed financials and your net profit looks strong on paper.
Most Lomita buyers with straightforward service businesses—contractors, consultants, real estate agents—close faster with bank statements. Established businesses with multiple revenue streams and formal accounting usually qualify for more with P&L documentation.
Yes, but it resets underwriting timelines. Switching adds 2 to 3 weeks because lenders must verify your CPA and review new documents.
Rates are similar for both programs. Your credit score, down payment, and total debt load matter more than documentation type.
Most lenders require 24 months of self-employment history. Some accept 12 months with strong deposits or P&L performance.
No. Lenders require a licensed CPA signature. Bookkeeper-prepared documents don't meet underwriting standards for P&L programs.
Lenders average deposits over 12 or 24 months, which smooths seasonality. Large one-time deposits may be excluded from income calculations.