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in Pico Rivera, CA
Self-employed borrowers in Pico Rivera face a choice: prove income with bank statements or go the P&L route. Both are non-QM loans designed for business owners who can't show traditional W-2s.
The difference comes down to how you document earnings. Bank statement loans pull straight from deposits. P&L loans need a CPA-prepared statement that shows profit minus expenses.
Bank statement loans use 12 to 24 months of business or personal bank statements to calculate income. Lenders average your deposits and apply an expense ratio—typically 25% to 50%—to estimate qualifying income.
This route works best for contractors, real estate agents, and business owners with consistent deposit patterns. You skip the CPA fee, but lenders scrutinize every transfer to separate business income from loans or transfers.
Expect rates 1% to 2% higher than conventional loans. Credit scores typically need to hit 620 minimum, though some programs go down to 600 with larger down payments.
P&L statement loans require a CPA-prepared profit and loss statement covering at least one year. Lenders use your net profit as qualifying income—no expense ratios applied since the CPA already backed out business costs.
This approach suits business owners with complex financials or heavy write-offs. If you depreciate equipment or carry significant deductible expenses, a P&L often shows higher qualifying income than bank statements would.
Rates run similar to bank statement loans—expect 1% to 2% above conventional. Most programs want 640+ credit scores and 15% to 20% down, though terms vary by lender and loan size.
The biggest split is documentation. Bank statements show raw deposits but need expense ratios applied. P&L statements already net out costs, so lenders use the bottom-line profit directly.
Bank statement loans work faster if you already have statements organized. P&L loans take longer—your CPA needs time to prepare the statement, and lenders verify the CPA's credentials before accepting it.
Income calculation favors different profiles. Clean deposit patterns with minimal business expenses do well with bank statements. Heavy write-offs or complex operations usually qualify for more with a P&L approach.
Choose bank statements if your deposits are clean and consistent. Contractors, consultants, and service providers with steady cash flow usually get approved faster without paying for CPA prep work.
Go with P&L if you write off major expenses or operate a capital-intensive business. Equipment depreciation, inventory costs, and other deductions lower your taxable income but don't affect qualifying income on a P&L loan.
Some borrowers submit both and let the lender calculate which shows stronger income. Rates vary by borrower profile and market conditions, so shopping programs across multiple lenders matters more than picking the "right" documentation upfront.
Yes, most bank statement programs accept personal accounts if business income flows through them. Lenders separate deposits from transfers and non-income sources.
Most lenders require at least 12 months, but some accept year-to-date plus the prior full year. The CPA must be licensed and provide contact info for verification.
Typically yes—lenders want to see established income patterns. Some programs flex to one year with strong reserves or down payments over 25%.
Rates run similar for both programs. Your credit score, down payment, and property type affect pricing more than documentation method.
Yes, if your file hits issues with one method. Some brokers submit both upfront to see which calculates higher qualifying income.