Loading
in Fairfax, CA
Fairfax's self-employed borrowers—consultants, contractors, creative professionals—face a choice when traditional income docs won't work. Both bank statement and P&L loans skip tax returns, but they verify income differently.
The right pick depends on how your business runs and what paperwork you already have. One uses raw deposits, the other uses formatted financials.
Bank statement loans use 12 or 24 months of business or personal account deposits to calculate income. Lenders average your monthly deposits, apply an expense ratio (typically 25-50%), and use that as qualifying income.
You control the documentation since you already have the statements. No CPA needed, no waiting for year-end financials. This works well for newer businesses or those with inconsistent month-to-month revenue.
Most lenders want 620+ credit and 10-20% down. Rates run 0.5-1.5% above conventional. Approval typically takes 3-4 weeks once statements are gathered.
P&L loans require a CPA-prepared profit and loss statement, usually covering 1-2 years. Your accountant formats income and expenses according to standard accounting practices, giving lenders a cleaner income picture.
This path works best for established businesses with formal bookkeeping. If you already file detailed tax returns and use a CPA, you have most documentation ready. The P&L shows income minus legitimate business expenses.
Credit and down payment requirements mirror bank statement loans: 620+ score, 10-20% down. Rates are similar too. The difference is in documentation formality, not pricing.
Bank statement loans let you move faster if you don't already work with a CPA. You pull statements online, submit them, done. P&L loans require accountant involvement, which adds time and cost if you don't have current financials.
Income calculation differs significantly. Bank statements use gross deposits minus a standard expense ratio. P&Ls use actual expenses your CPA documents. If your business has high verifiable expenses, P&L might show higher qualifying income.
Lender preference varies too. Some lenders accept both, others specialize in one. Bank statement programs outnumber P&L options in our network by about 3 to 1.
Choose bank statements if you're moving quickly, don't use a CPA regularly, or run a business with relatively low expenses. This works well for consultants, freelancers, and service providers who keep most revenue as income.
Pick P&L if you already maintain formal books, have significant documented expenses, or operate a business where gross deposits don't reflect actual income—like retail with inventory costs or contracting with material expenses.
In Fairfax's market, many creative professionals and independent contractors use bank statements. Business owners with storefronts, established practices, or complex operations tend toward P&L. Your existing documentation usually points to the right answer.
Most lenders accept either personal or business accounts. If income flows through personal accounts, use those.
Expect $500-2000 depending on business complexity. Some CPAs charge more if they need to reconstruct records.
Rates are essentially the same—both are non-QM products. Pricing depends more on credit score and down payment.
Most programs allow 12 months minimum. Two years often shows stronger income trends and improves approval odds.
Bank statement loans average all months, smoothing volatility. P&L shows annual totals, which also helps with seasonal businesses.
Yes. We often submit both documentation types to different lenders to find the best approval terms.