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in Riverside, CA
Self-employed borrowers in Riverside have two main options for income verification. Both Bank Statement Loans and Profit & Loss Statement Loans are non-QM mortgages designed for business owners and independent contractors.
These loans help borrowers who cannot provide traditional W-2 income documentation. Each option uses different financial documents to prove your ability to repay. Understanding the differences helps you choose the best fit for your situation.
Bank Statement Loans use 12 to 24 months of personal or business bank statements to verify income. Lenders review deposits to calculate your average monthly income. This method works well if you have consistent cash flow through your accounts.
You don't need a CPA or formal financial statements. The application process can be faster since you're using documents you already have. Rates vary by borrower profile and market conditions.
Profit & Loss Statement Loans require a CPA-prepared P&L statement to verify your income. This approach looks at your business profitability rather than bank deposits. The P&L must be prepared by a licensed certified public accountant.
This option works well if you already work with a CPA for tax planning. It may show higher income if you have significant business expenses that reduce taxable income. Rates vary by borrower profile and market conditions.
The main difference is documentation. Bank Statement Loans pull income directly from your deposits, while P&L Loans rely on accountant-prepared statements. Bank statements show actual cash flow, but P&L statements show net profit.
Cost is another factor. Bank Statement Loans don't require CPA fees for preparation. P&L Loans need professional accounting services, which adds to your upfront costs. Processing time can differ based on how quickly you can gather required documents.
Choose Bank Statement Loans if you want a simpler process without CPA involvement. This works best when your bank deposits accurately reflect your income. It's ideal for borrowers who don't currently use an accountant.
Choose P&L Statement Loans if you already have a CPA preparing financial statements. This option may qualify you for more if business expenses reduce your bank deposits. It's better when your business has complex accounting or significant write-offs.
Yes, both Bank Statement and P&L Statement Loans are available to self-employed borrowers in Riverside. Your lender can help determine which option fits your documentation and financial situation best.
Bank Statement Loans are typically faster since you don't need CPA-prepared documents. You can usually gather 12-24 months of statements quickly from your bank.
Non-QM loans often have different pricing than conventional loans. Rates vary by borrower profile and market conditions. Your credit, down payment, and financial strength all impact your rate.
Switching documentation types may require restarting underwriting. It's best to choose your approach upfront. Discuss both options with your lender before applying.
Most lenders require at least two years of self-employment history. The bank statements or P&L must cover the required timeframe to verify consistent income.