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in Nevada City, CA
Nevada City's self-employed borrowers have two strong paths to mortgage approval without traditional W-2s. Both bank statement loans and P&L statement loans bypass tax returns, but they verify income differently.
Choosing between them depends on how your business finances are structured and what documentation you can produce. Most self-employed borrowers qualify for one option more easily than the other.
Bank statement loans calculate income from deposits in your personal or business accounts over 12 or 24 months. Lenders typically use 50% to 75% of average monthly deposits as qualifying income, depending on your business type.
You don't need a CPA or formal financial statements. The underwriter reviews your bank statements directly, looking at deposit patterns and business expenses.
These work best for cash-heavy businesses, contractors, or anyone who shows strong deposit activity but writes off most income on tax returns. Minimum credit scores start around 620, with rates 1% to 2% above conventional loans.
P&L statement loans require a certified CPA to prepare your profit and loss statement covering at least one year, sometimes two. The CPA must be licensed and cannot be a family member.
Lenders use the net income from your P&L to qualify you, often requiring a year-to-date statement plus prior year financials. This method works when your business shows healthy profits on paper.
These loans favor established businesses with clean bookkeeping and professional accounting relationships. Rates and terms are similar to bank statement loans, but the documentation bar is higher upfront.
The biggest split is documentation burden. Bank statement loans need only your statements from any bank. P&L loans require paying a CPA for certified financials, which can cost $500 to $2,000.
Income calculation differs sharply. Bank statements use gross deposits with a percentage factor. P&L loans use net profit after expenses, which often shows lower qualifying income if you maximize deductions.
Processing time varies. Bank statement loans close faster because underwriters review statements directly. P&L loans add time for CPA prep and verification of the accountant's credentials.
Go with bank statement loans if you run a cash business, write off most income, or don't have an established CPA relationship. This path works for Uber drivers, contractors, and small business owners in Nevada City who keep minimal formal records.
Choose P&L loans if your business already maintains professional books, shows solid net profit, and you work with a licensed CPA. This makes sense for established service businesses, consultants, or anyone who prefers showing income through formal statements.
Neither option is inherently better. Bank statements offer simplicity and speed. P&L statements provide cleaner documentation if your books support strong income. Most Nevada City self-employed borrowers default to bank statements because they skip the CPA requirement entirely.
Yes, most lenders accept either or both. Using business accounts often qualifies you for higher income calculation percentages depending on expense patterns.
Your CPA must hold an active state license and cannot be related to you. The lender will verify their credentials directly before accepting the P&L.
Rates are nearly identical between both programs. Your credit score, down payment, and property type affect rates more than documentation method.
Yes, but it restarts underwriting. Most brokers determine the best path upfront based on your documentation and income structure.
Most programs require 12 months minimum. Some lenders offer 24-month options that can smooth out income fluctuations and improve qualification.