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in Sierra Madre, CA
Self-employed buyers in Sierra Madre face a choice between two income verification methods. Bank statement loans and P&L statement loans both serve borrowers who can't show traditional W-2s, but they work differently.
Most self-employed borrowers qualify faster with bank statements. P&L loans require CPA involvement, which adds time and cost but can show higher income in certain situations.
Bank statement loans use 12 or 24 months of personal or business bank deposits to calculate income. Lenders typically use 50-75% of average monthly deposits as qualifying income, depending on how you file taxes.
You provide statements directly from your bank. No CPA letter required. Most lenders review them within a few days, making this the faster non-QM option for Sierra Madre self-employed buyers.
Credit requirements start around 620, though better rates kick in at 680. Down payments range from 10-20% depending on the property type and loan amount.
P&L statement loans require a CPA-prepared profit and loss statement covering 12-24 months. The CPA must be licensed and cannot be a family member or business partner.
Lenders use the net income from your P&L to qualify you. If your business shows strong profitability on paper but you keep minimal deposits, this route can qualify you for more loan than bank statements would.
Expect slightly stricter credit requirements—most lenders want 640 minimum. Down payments mirror bank statement loans at 10-20%, but rates may run 0.25-0.50% higher due to added documentation complexity.
The biggest split is preparation time. Bank statements take minutes to download. P&L statements require CPA engagement, which can add 2-4 weeks and cost $500-2,000 depending on your business complexity.
Income calculation differs dramatically. Bank statement lenders apply a percentage to deposits, which penalizes borrowers who leave profits in the business. P&L loans use bottom-line net income, rewarding profitable businesses with retained earnings.
Rates vary by borrower profile and market conditions. Bank statement loans typically price 0.25-0.50% lower because documentation is simpler to verify. Both options beat stated income programs from a decade ago.
Choose bank statements if you run cash-heavy deposits through personal accounts and want to close fast. This works for contractors, freelancers, and small business owners who can document consistent monthly income.
Go with P&L if you retain earnings in the business or have complex deductions that reduce your taxable income. The CPA statement captures profitability that doesn't show up in deposit patterns.
Some Sierra Madre buyers submit both during pre-approval to see which yields better qualification. We run scenarios across 200+ lenders to find the strongest approval path for your specific business structure.
Yes. Lenders accept business accounts if they show regular deposits. Some borrowers use both personal and business statements to maximize qualifying income.
The CPA must hold an active license in any U.S. state. California licensing isn't required, but they cannot be related to you or have ownership in your business.
Bank statement loans typically price 0.25-0.50% lower. Simpler documentation means less lender risk, which translates to better pricing for borrowers.
Yes, but it restarts underwriting. If bank statements don't qualify you for enough loan, we pivot to P&L before formal application to avoid delays.
No. Neither program requires tax returns for income verification. That's the entire point—self-employed borrowers often write off income that reduces tax liability.
Most lenders want 12-24 months. Longer history strengthens the file, but 12 months of consistent deposits usually suffices for approval.