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in Santa Fe Springs, CA
Both bank statement and P&L loans solve the same problem for Santa Fe Springs self-employed borrowers: proving income without W-2s. The difference is how you document that income.
Bank statement loans pull numbers directly from your deposits. P&L loans require a CPA to formalize your business financials. Your documentation situation determines which path works.
Bank statement loans use 12 to 24 months of personal or business bank statements to calculate income. Lenders average your deposits and apply a percentage to determine qualifying income.
This works well if your bank statements show consistent deposits but your tax returns don't reflect your full earning power. Most lenders require 10-20% down and credit scores above 620.
P&L statement loans require a CPA-prepared profit and loss statement covering at least 12 months. This shows your business revenue minus expenses to calculate net income.
Lenders treat this like business tax returns but often without requiring full returns. You'll need a licensed CPA to prepare the statement, which adds time and cost to the process.
Bank statement loans work faster because you control the documents. You provide statements, lender calculates income, done. P&L loans require coordinating with your CPA and waiting for professional preparation.
The income calculation differs too. Bank statements show gross deposits which lenders discount by 25-50% for expenses. P&L shows actual net income after your CPA deducts business costs. If you run lean expenses through your business, bank statements may qualify you for more.
Choose bank statement loans if you don't have a CPA relationship or need to close fast. They work especially well for independent contractors, gig workers, and business owners who deposit most income into one account.
Go with P&L loans if you already work with a CPA and keep clean books. They make sense for established businesses with formal accounting, especially if your bank deposits are messy or split across multiple accounts.
No. Lenders require you to pick one documentation method. Choose based on which shows stronger qualifying income for your situation.
Rates are similar since both are non-QM products. Your credit score and down payment affect pricing more than which documentation method you use.
Most lenders want 12 or 24 months. The 24-month option sometimes gets better rates since it shows longer income stability.
Yes. The CPA must be licensed and in good standing. Most lenders verify the CPA's credentials directly before accepting the statement.
Bank statement loans still work with irregular income. Lenders average deposits over 12-24 months to smooth out the variability.