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in Folsom, CA
Self-employed professionals and business owners in Folsom often face challenges when applying for traditional mortgages. Bank Statement Loans and Profit & Loss Statement Loans offer two distinct paths to homeownership without requiring W-2 income verification.
Both are Non-QM loan options designed specifically for entrepreneurs, freelancers, and independent contractors. The main difference lies in how you document your income and what financial records your lender reviews during underwriting.
Bank Statement Loans verify income using 12 to 24 months of personal or business bank statements. Lenders calculate your qualifying income by analyzing deposits and averaging your monthly cash flow.
This option works well for borrowers who show strong, consistent deposits but may have significant tax write-offs. You provide bank statements instead of tax returns, making the process simpler for many self-employed individuals.
Most programs require 10-20% down payment depending on credit score and loan amount. Rates vary by borrower profile and market conditions, typically running slightly higher than conventional loans due to the alternative documentation.
Profit & Loss Statement Loans rely on CPA-prepared financial statements to document your business income. Your accountant creates a detailed P&L showing revenue, expenses, and net profit over a specific period.
This approach appeals to borrowers who already maintain formal business accounting. The CPA-prepared documentation provides detailed financial analysis that lenders find reliable for underwriting purposes.
You'll typically need a year-to-date P&L plus statements from previous years. Rates vary by borrower profile and market conditions, with terms similar to other Non-QM products available to self-employed borrowers in Sacramento County.
The primary difference is documentation style. Bank Statement Loans review raw deposit activity, while P&L Loans examine professionally prepared financial statements that show your business's formal accounting picture.
Bank Statement Loans often process faster since you're simply providing existing bank records. P&L Loans require your CPA to prepare specific documents, which may take additional time but provides more comprehensive financial analysis.
Cost considerations differ too. Bank Statement Loans have no CPA preparation fees, while P&L Loans require professional accounting services. However, borrowers who already work with CPAs may find P&L documentation more natural to their business operations.
Choose Bank Statement Loans if you want straightforward documentation without CPA involvement. This option works best when you have consistent deposits, operate as a sole proprietor, or prefer using existing bank records rather than preparing formal statements.
Consider P&L Loans if you already maintain professional accounting or operate an established business with complex finances. This route makes sense when you have a CPA relationship and your formal books accurately reflect qualifying income.
Both programs serve Folsom's diverse self-employed community, from real estate agents and contractors to tech consultants and small business owners. The right choice depends on how you currently track your business finances and what documentation you can provide most easily.
Generally, you choose one documentation method per loan application. Some lenders may review both to provide the best qualifying income calculation, but the loan will be underwritten using one primary method.
This varies by individual situation. Bank Statement Loans may show higher income if you have strong deposits but many write-offs. P&L Loans might qualify you better if your formal books show solid net profit.
Most lenders require minimum credit scores of 620-680 for both options. Exact requirements vary by lender and other factors like down payment amount and overall borrower profile.
Bank Statement Loans often close in 30-45 days. P&L Loans may take slightly longer if CPA preparation is needed, though borrowers with current statements ready can close on similar timelines.
Rates vary by borrower profile and market conditions. Both are Non-QM products with similar pricing structures, though individual factors like credit score and down payment impact your specific rate more than loan type.