Loading
in Point Arena, CA
Self-employed borrowers in Point Arena face a choice: prove income with bank statements or with a CPA-prepared P&L. Both are non-QM loans designed for people who don't fit the W-2 mold.
The right choice depends on how you manage your business finances and what documentation you already have. Most borrowers find one option significantly easier than the other based on their accounting setup.
Bank statement loans use 12 to 24 months of personal or business bank deposits to calculate your income. Lenders look at total deposits, then back out transfers and non-income items to arrive at a qualifying figure.
This works well if you run money through your accounts and don't write off every possible expense. You avoid needing tax returns that show reduced income from aggressive deductions.
Expect rates 1-2% higher than conventional loans. Credit scores start at 620, though 680+ gets better pricing. Down payments typically range from 10-20% depending on the lender and your profile.
P&L statement loans require a CPA-prepared profit and loss statement covering at least one year of business operations. Some lenders want two years. The P&L shows your business income without the tax deductions that crush your qualifying power.
This route makes sense if you already work with a CPA and maintain clean books. The P&L reflects business performance before you optimize for taxes, giving lenders a clearer income picture.
Pricing sits in the same range as bank statement loans. You still need solid credit and a meaningful down payment. The difference is in documentation style, not in rates or approval odds.
Bank statement loans pull directly from your deposit history. P&L loans rely on an accountant's summary of business performance. The first is transactional evidence, the second is a financial professional's assessment.
Bank statements work faster if you don't currently use a CPA. Getting a retroactive P&L prepared costs money and time. But if your CPA already produces quarterly or annual P&Ls, that route is straightforward.
Lenders calculate income differently with each method. Bank statement lenders apply a percentage to your deposits after removing non-income items. P&L lenders use the net income figure your CPA reports, sometimes adding back certain expenses.
Choose bank statements if you handle your own books or use basic accounting software. This path costs less upfront since you skip CPA fees for loan-specific documentation. Your existing bank records are enough.
Go with a P&L if you already pay a CPA for bookkeeping and business filings. The statement they produce for your loan mirrors what they create for tax planning. No need to hand over months of bank records to a lender.
In Point Arena's small business community, many self-employed buyers start with bank statements because the documentation is simpler. If a lender sees inconsistent deposits or commingled accounts, they may ask for a P&L instead to clarify the income picture.
Yes, most lenders accept business accounts. Some prefer to see both personal and business statements to capture all income sources.
Lenders typically require a licensed CPA in good standing. Some accept enrolled agents or other tax professionals depending on the loan program.
It varies by situation. Bank statement lenders use 50-75% of deposits. P&L lenders use reported net income, sometimes adding back depreciation or other expenses.
Yes, but it restarts the documentation process. Most borrowers pick one method upfront based on what records they already maintain.
Yes, both programs cover investment properties. Down payment requirements increase to 20-25% for rentals regardless of which income documentation you use.