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in Rancho Palos Verdes, CA
Self-employed borrowers in Rancho Palos Verdes face a choice between two main non-QM paths. Bank statement loans pull income directly from deposits, while P&L loans rely on CPA-prepared financials.
Both get you approved without tax returns. The difference is how lenders calculate your qualifying income and what documentation they require.
Most self-employed borrowers qualify for either option. Your choice depends on how you run your books and which method shows stronger income.
Bank statement loans use 12 or 24 months of business or personal bank statements. Lenders add up deposits and apply a percentage (typically 50-75%) as qualifying income.
You avoid the tax return problem that kills most self-employed applications. If you write off heavily but deposit solid revenue, this loan shows your real earning power.
Credit minimums start at 620, though 680+ gets better rates. Loan amounts reach $3 million with 10-20% down depending on property type and credit profile.
Processing takes 3-4 weeks once you submit statements. Most lenders want consecutive months with no gaps in the documentation period.
P&L loans require a CPA-prepared profit and loss statement covering 12-24 months. Lenders use your net profit as qualifying income, similar to traditional underwriting.
Your CPA must be licensed and unrelated to you. The statement needs standard formatting with clear revenue, expenses, and profit margins.
Credit requirements match bank statement loans at 620 minimum. Down payment starts at 10%, though lower debt ratios may push that higher.
This route works best if you already produce monthly P&Ls for your business. If you don't track detailed financials, getting statements prepared just for the loan adds cost and time.
Bank statements show cash flow. P&Ls show profit after expenses. If you run high revenue but tight margins, bank statements typically qualify you for more.
Bank statement loans cost less upfront since you don't pay a CPA. P&L loans may offer slightly better rates if your profit margins are strong and consistent.
Documentation speed differs significantly. Most borrowers have bank statements ready to download. Getting CPA-prepared P&Ls takes 2-4 weeks if you don't already produce them.
Underwriters scrutinize different things. Bank statement lenders flag irregular deposits and transfers between accounts. P&L lenders focus on expense ratios and profit consistency.
Go with bank statements if you write off aggressively or run multiple accounts with solid deposit history. This works for contractors, consultants, and anyone who shows strong cash flow but minimal taxable income.
Choose P&L if you already produce detailed financials and your net profit exceeds what 50-75% of deposits would show. This suits established businesses with clean books and steady margins.
In Rancho Palos Verdes, most self-employed buyers use bank statements. Preparation is faster, income calculation is simpler, and you don't need to coordinate with a CPA mid-transaction.
Rates vary by borrower profile and market conditions. Run both scenarios with actual numbers before deciding which path to take.
Yes, if you're a sole proprietor or run income through personal accounts. Lenders prefer business accounts but accept personal statements with clear business deposits.
No, you need a standard P&L statement, not an audited financial report. The CPA must be licensed and sign the statement, but full audits aren't required.
Rates are nearly identical between the two. Your credit score and down payment affect pricing more than which income documentation method you choose.
Yes, but it restarts underwriting. Most brokers run both scenarios upfront to see which qualifies you for more house before locking your rate.
Yes, both support investment properties. Down payment requirements increase to 20-25%, and some lenders cap the number of financed properties you can hold.