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in Signal Hill, CA
Self-employed borrowers in Signal Hill face a documentation fork: show your bank deposits or hand over a CPA-prepared P&L. Both prove income without W-2s, but they work differently.
Bank statement loans pull income from 12-24 months of deposits. P&L loans require a formal statement from your accountant. One uses what's already in your account, the other needs professional prep.
Bank statement loans analyze deposits over 12 or 24 months. Lenders average your monthly inflows, then apply an expense ratio (typically 25-50%) to estimate net income.
This path works if you keep business and personal funds separate and make consistent deposits. No CPA required. Most lenders want 10-20% down and credit scores above 620.
P&L loans require a CPA or licensed accountant to prepare a profit and loss statement covering 1-2 years. Lenders use the net income line to qualify you.
This route suits borrowers with detailed bookkeeping and an accountant on retainer. Down payments run 10-20%, credit scores 620 and up. HousingWire just flagged new options like RateFi that let crypto holdings count as reserves on non-QM deals — useful if you hold digital assets.
Bank statement loans are faster because you're already sitting on 12-24 months of records. P&L loans take longer — your CPA has to compile and sign off on financials.
Qualifying income differs too. Bank statements apply a flat expense ratio to deposits. P&Ls show actual net profit, which can be higher or lower depending on your write-offs. If you claim heavy deductions, bank statements might show more income. If you run lean, P&Ls could work better.
Pick bank statements if you deposit regularly but don't have a CPA relationship or want to close fast. Pick P&L if you keep detailed books and your net income looks strong on paper.
Signal Hill buyers often use bank statements for speed, especially in competitive pockets near the hilltop homes. P&L borrowers tend to be established businesses with accounting infrastructure already in place. Both get you financed — it's about which proof you already have.
Yes, if business income flows through personal accounts. Most lenders prefer separate business accounts but accept personal statements for sole proprietors.
They average monthly deposits, then deduct 25-50% for expenses. A $10,000 monthly deposit might qualify as $5,000-$7,500 income depending on the lender's ratio.
No audit needed. Just a CPA-signed profit and loss statement covering 12-24 months. Full audits are rare outside jumbo commercial deals.
Rates are similar since both are non-QM products. Your credit score and down payment matter more than whether you use bank statements or P&Ls.
Yes, if one path isn't working. Most brokers test both methods during pre-approval to see which shows stronger income for your profile.