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in Palmdale, CA
Self-employed borrowers in Palmdale face a choice: prove income with bank statements or with CPA-prepared P&L statements. Both are non-QM loans designed for entrepreneurs, contractors, and small business owners who can't provide W-2s.
The right choice depends on how you track income and what documentation you already have. Bank statement loans work straight from your business account deposits. P&L loans require formal accounting but can show higher qualifying income.
Bank statement loans use 12 to 24 months of business or personal bank deposits to calculate income. Lenders average your monthly deposits and apply an expense ratio—typically 25% to 50%—to determine qualifying income.
This option works for borrowers who run cash through their accounts but write off most income on tax returns. You don't need a CPA or formal books. Just upload statements and let the lender do the math.
Rates run 1% to 2% higher than conventional loans. You'll need 10% to 20% down depending on credit score and loan amount. Expect rates to vary by borrower profile and market conditions.
P&L statement loans require a CPA-prepared profit and loss statement covering 12 to 24 months. The CPA must be licensed and provide a signed letter verifying the accuracy of the financials.
This approach works best when your P&L shows higher net profit than your bank deposits suggest. You're proving income through formal accounting rather than raw cash flow. It's cleaner for borrowers who already work with a CPA.
Pricing sits in the same range as bank statement loans—expect rates 1% to 2% above conventional. Down payment requirements mirror bank statement deals at 10% to 20%. Rates vary by borrower profile and market conditions.
The main split is documentation. Bank statement loans pull directly from your account activity—no accountant needed. P&L loans require a licensed CPA to prepare and verify financials. If you don't already have a CPA relationship, bank statements are faster.
Income calculation differs too. Bank statement lenders average deposits and subtract an expense ratio. P&L lenders use the net profit line from your CPA's statement. If your expenses run below 50% of revenue, a P&L might show more qualifying income.
Both loans accept similar credit profiles and down payments. Neither requires tax returns. The choice comes down to whether you have formal books or prefer to work from bank deposits.
Choose bank statement loans if you deposit consistent revenue but lack formal accounting. This works for contractors, consultants, and gig workers who run cash through accounts but write off most income. You skip the CPA cost and move faster.
Pick P&L loans if you already maintain books with a CPA and your net profit looks strong. This fits established businesses with clean financials and expenses below 40% of revenue. Your CPA can show higher qualifying income than raw deposits would suggest.
Most Palmdale self-employed buyers fit one of those profiles. If you're unsure which shows better income, run both scenarios. We check qualification under each method and pick the stronger number.
Yes, most bank statement lenders accept personal accounts if that's where you deposit business income. They'll still apply an expense ratio to calculate qualifying income.
Your CPA must hold an active license in good standing. They'll sign a letter verifying the P&L accuracy. Most established CPAs handle this routinely.
Rates are nearly identical—both price 1% to 2% above conventional loans. Your credit score and down payment matter more than which documentation method you choose.
Yes, if your P&L shows stronger income. We sometimes pivot strategies when a borrower's CPA finishes books after we start the file.
Most lenders accept 12 months. Using 24 months can help if recent income dipped or you want to smooth out seasonal fluctuations.