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in West Covina, CA
West Covina self-employed buyers have two main non-QM options: bank statement loans and P&L statement loans. Both skip traditional tax returns, but the documentation you provide and how lenders calculate income differ sharply.
Bank statement loans pull income from your monthly deposits. P&L loans use a CPA's profit analysis. Your choice depends on how your business runs and what paperwork you already keep.
Bank statement loans let lenders average your deposits over 12 or 24 months. They add up business deposits, apply an expense factor (usually 25% to 50%), and use the result as qualifying income.
This works well if you run heavy cash flow through business accounts. Contractors, retailers, and service businesses with consistent deposits often qualify for more this way than through tax returns.
You'll need 12 to 24 months of business bank statements showing regular activity. Some lenders accept personal accounts if you're a sole proprietor mixing business and personal funds.
P&L statement loans require a CPA-prepared profit and loss report covering at least 12 months. The CPA must be licensed and unrelated to you. Lenders use the net profit figure as your qualifying income.
This route makes sense if you already work with a CPA for quarterly books or tax planning. It's cleaner for businesses with complex structures — multiple entities, partnerships, or significant write-offs that don't show up as deposits.
You'll typically need a business license and proof your CPA is licensed. Some lenders also want a year-to-date P&L if you're applying mid-year.
The core split is documentation versus calculation. Bank statement loans count deposits; P&L loans count profit. If you write off major expenses but run high deposits, bank statements usually deliver higher qualifying income.
P&L loans demand a licensed CPA, which costs $500 to $2,000 depending on complexity. Bank statement loans just need PDF exports from your bank. Rates vary by borrower profile and market conditions, but pricing is similar — both typically run 1% to 2% above conforming rates.
Approval timelines differ too. Bank statement deals close in 20 to 30 days once you provide statements. P&L deals take 25 to 35 days because underwriters verify CPA credentials and review the report line by line.
Choose bank statement loans if you run solid deposits but take aggressive write-offs. This includes contractors, e-commerce sellers, consultants, and anyone who keeps business money moving through accounts monthly.
Go P&L if you already maintain CPA-prepared books or have a business structure where profit looks better than deposits. Partnerships, LLCs with multiple members, or businesses holding inventory all fit this profile.
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No. Lenders pick one income method per file. You can't mix documentation types to boost qualifying income on a single application.
Typically yes — most non-QM lenders want 10% to 20% down for either option. Your credit score and property type affect minimums more than income documentation.
Rates are nearly identical. Pricing depends on credit, loan-to-value, and reserves — not whether you used bank statements or a P&L to prove income.
Most lenders want 12 months. Some accept 24 months if recent activity is inconsistent or you want a higher income average for qualification.
No. The CPA must be licensed in any U.S. state and unrelated to you. Location doesn't matter as long as credentials check out.
Yes, but it restarts underwriting. You'll need to provide the new documentation and expect another 20 to 30 days for review and approval.