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in Paramount, CA
Self-employed borrowers in Paramount face a choice between two income documentation paths. Bank statement loans pull income directly from deposits, while P&L loans rely on CPA-prepared financials.
Both are Non-QM products designed for business owners who can't show W-2s. The right choice depends on how your business handles cash flow and how you file taxes.
Bank statement loans use 12 or 24 months of business or personal bank statements to calculate income. Underwriters look at deposits, average the monthly totals, and apply that number to your debt-to-income ratio.
This works well for contractors, restaurant owners, and cash-heavy businesses in Paramount. You avoid showing tax returns that might reflect heavy write-offs. Lenders typically require 10-20% down and credit scores above 620.
Profit & loss statement loans require a CPA-prepared P&L covering at least 12 months. The lender uses your bottom-line profit to qualify you, similar to how conventional loans treat W-2 income.
This option suits established businesses with clean accounting and CPAs already on payroll. Your P&L needs to match business bank activity. Some lenders also want a balance sheet and year-to-date statements.
Bank statement loans calculate income from raw deposits. P&L loans rely on accounting profit after expenses. If you write off aggressively, bank statements show higher income. If your books are clean and profits are strong, P&L might qualify you for more.
Documentation timelines differ too. Bank statements take days to pull. CPA-prepared P&Ls can take weeks if your accountant is busy. Rates vary by borrower profile and market conditions, but both programs price similarly since they're both Non-QM.
Choose bank statement loans if you take heavy deductions or run a cash business without formal accounting. This route works for newer businesses or owners who handle their own books. You'll need consistent deposit history without huge month-to-month swings.
Go with P&L loans if you already work with a CPA and your profit margins are solid. Lenders like this option for established businesses with two years of financials. It won't work if your accountant shows minimal profit to avoid taxes.
Some lenders allow it, but most want one or the other. Mixing documentation can slow underwriting and create confusion if the numbers don't align.
Most lenders set the floor at 620 for both programs. Higher scores unlock better rates, but baseline requirements match across bank statement and P&L loans.
Bank statement loans typically close quicker since pulling statements takes days. P&L loans depend on your CPA's turnaround time, which can stretch weeks during tax season.
You can, but it resets underwriting. If your first approach isn't working, talk to your broker before ordering new documentation.
Yes, both bank statement and P&L loans cover primary homes, second homes, and investment properties. Down payment requirements increase for non-owner-occupied purchases.