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in Santa Clarita, CA
Both bank statement and P&L loans solve the same problem for self-employed borrowers in Santa Clarita. You write off too much income to qualify using tax returns.
The difference is what paperwork you bring and how lenders calculate your qualifying income. One uses your bank deposits, the other uses a CPA-prepared financial statement.
Most self-employed borrowers can use either option. Your choice depends on how clean your bank statements look and whether you already work with a CPA who prepares P&L statements.
Bank statement loans use 12 or 24 months of personal or business bank statements to verify income. Lenders review your deposits and apply an expense factor between 25% and 50%.
You need consistent deposits that show you can afford the mortgage. Most lenders want to see 12 months minimum, though 24 months can sometimes get you better rates.
This works well if you run most business income through one or two accounts. It falls apart if you use multiple accounts, have irregular deposits, or commingle personal and business funds heavily.
P&L statement loans require a CPA-prepared profit and loss statement covering one or two years. The lender uses your net profit to qualify you, similar to how they'd read a tax return.
You'll also need a CPA letter certifying the P&L is accurate. Some lenders want to see matching business bank statements as backup, others don't.
This option works if you already pay a CPA to prepare financials. It's cleaner than bank statement loans when you have complex business structures or multiple revenue streams.
Income calculation differs sharply. Bank statement loans use gross deposits minus an expense factor. P&L loans use your bottom-line net profit after all expenses.
Documentation burden flips depending on your current setup. If you don't already work with a CPA who prepares P&L statements, bank statement loans save you money and time.
Rates vary by borrower profile and market conditions. Both loan types typically price similarly, though some lenders offer slightly better terms on P&L loans for borrowers with strong financials.
Use bank statement loans if you don't already have CPA-prepared financials. They're faster to document and don't require hiring an accountant just to get a mortgage.
Use P&L loans if you're an LLC owner with multiple entities, S-corp distributions, or complex write-offs. CPAs can present your income more favorably than raw bank deposits.
Santa Clarita has plenty of self-employed business owners in both camps. The loan that shows higher qualifying income is the one you should use, assuming your documentation is clean.
Yes, but it restarts underwriting and adds 1-2 weeks to your timeline. Pick one path early and stick with it unless income calculation comes back too low.
Usually yes, most lenders want 20% down for both. Some will go to 15% down with strong credit and reserves, but that's lender-specific.
Depends on your expense ratio. Bank statements often show more income if you write off heavily. Run both calculations before choosing.
No. Lenders require a licensed CPA to prepare and certify the P&L statement. Self-prepared financials don't meet underwriting standards.
Most lenders want two years minimum. Some will accept one year if you worked in the same industry as a W-2 employee before going self-employed.