Loading
in Colfax, CA
Both bank statement and P&L loans exist because self-employed borrowers write off income that makes W-2 qualifying impossible. The difference comes down to how much documentation you want to produce and whether you have a CPA relationship.
In Colfax, where many borrowers run small businesses or work as independent contractors, these non-QM options open doors that conventional loans slam shut. Choosing between them depends on your accounting setup and how clean your monthly deposits look.
Bank statement loans calculate income from 12 or 24 months of business or personal bank deposits. Lenders apply an expense factor (usually 25-50%) to account for business costs, then use what remains as qualifying income.
You skip the CPA middleman. Your statements show real-time cash flow, which works great if your income improved recently or if you write off everything possible on taxes. Most lenders want 10-20% down and credit scores above 620.
P&L statement loans use a CPA-prepared profit and loss report covering 12-24 months. The CPA signs off that your business income matches what you claim, giving lenders verified numbers without diving into tax returns.
This route makes sense if you already work with a CPA or if your bank deposits look messy—multiple accounts, irregular transfers, or commingled personal and business funds. The CPA letter adds credibility that raw statements can't provide.
Bank statement loans move faster because you upload statements and move on. P&L loans require CPA engagement, which adds time and a few hundred dollars in accounting fees. That speed difference matters in competitive Colfax markets.
Income calculation differs too. Bank statements show gross deposits minus an expense factor. P&L statements show net profit after actual documented expenses. If your real expense ratio is lower than what lenders assume, bank statements might qualify you for more house.
Choose bank statements if your deposits are consistent, your business is straightforward, and you want to close quickly. This works for most sole proprietors and independent contractors who keep clean books in one or two accounts.
Go with a P&L statement if your banking is complicated—multiple accounts, lots of transfers, or if you already maintain CPA-prepared financials. It's also the better choice when your actual expense ratio is significantly different from the lender's assumed deduction.
Yes, but it restarts underwriting and adds 1-2 weeks. Most borrowers pick one approach upfront based on which documentation they already have organized.
Generally yes—most lenders want 620 minimum for both. Down payment requirements (usually 10-20%) also stay similar across both documentation methods.
Rates vary by borrower profile and market conditions, but P&L loans sometimes edge lower because CPA verification reduces lender risk. The difference is typically under 0.25%.
Some lenders allow it, especially if one source alone doesn't show enough income. This hybrid approach works when you have strong documentation in both formats.
Most lenders require 12-24 months for either option. Using 24 months strengthens your application by showing sustained income rather than a short-term spike.