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in San Juan Bautista, CA
Both bank statement and P&L loans solve the same problem for self-employed borrowers in San Juan Bautista: proving income without W-2s. The difference comes down to how you document that income and which method shows your earning power more accurately.
Most self-employed borrowers qualify faster with bank statements because the underwriting is simpler. P&L loans require CPA preparation, which adds time and cost but can work better if your deposits don't reflect your true income.
Bank statement loans use 12 to 24 months of personal or business bank statements to calculate your income. Lenders average your deposits and apply an expense ratio to arrive at qualifying income.
You skip tax returns entirely, which helps if you write off most of your income. Credit scores typically need to hit 620 minimum, and down payments start at 10% but often run 15-20% in practice.
This is the fastest path to approval for most self-employed buyers in San Benito County. Documentation is straightforward: pull your statements, sign a 4506-C, and you're done.
P&L statement loans require a CPA-prepared profit and loss statement covering 12-24 months of business activity. Your accountant must be licensed and uninvolved in the transaction.
These loans work well when your business structure makes bank deposits misleading—like if you reinvest revenue before it hits your personal account. The P&L shows gross income minus expenses, giving lenders a clearer picture.
Expect similar credit and down payment requirements as bank statement loans. The trade-off is additional prep time and CPA fees, but the income calculation can be more favorable depending on your business model.
Bank statement loans look at cash flow—what actually moved through your accounts. P&L loans look at business performance—revenue minus expenses on paper. If those two numbers tell different stories, one loan will qualify you at a higher amount.
Processing time differs by two to four weeks. Bank statements are ready now; P&Ls require your CPA to prepare documentation and sign off. Cost differs too—bank statement loans have no third-party prep fees, while P&Ls add $500-1500 in CPA charges.
Underwriting is stricter on P&L loans because the income isn't as directly verified. Lenders scrutinize the CPA credentials and cross-check figures more carefully. Bank statement loans move faster because deposits are deposits—less room for interpretation.
Choose bank statement loans if your personal or business deposits reflect your actual income. This covers most independent contractors, gig workers, and small business owners in San Juan Bautista who keep straightforward books.
Go with P&L loans if your business structure hides income before it hits your account—common with S-corps, partnerships, or businesses with significant reinvestment. Also consider P&L if your bank statements show irregular deposits that understate your consistent earnings.
For borrowers who qualify under both methods, bank statements win on speed and cost. But if the P&L shows 20% more qualifying income, the extra time and CPA fee pay for themselves in better loan terms.
No. Lenders require one income documentation method per loan. Choose whichever shows your income more favorably before you apply.
You need a licensed CPA with no financial interest in your transaction. Bookkeepers and unlicensed accountants don't meet lender requirements.
Rates are similar since both are non-QM products. Your credit score and down payment affect pricing more than documentation method. Rates vary by borrower profile and market conditions.
Most lenders require 12 months minimum, but 24 months is common. You need consecutive months with no gaps in the statement history.
Yes, but it restarts underwriting and adds weeks to closing. Pick the right documentation method before you submit your application.