Loading
in Solana Beach, CA
Self-employed borrowers in Solana Beach face a common problem: tax write-offs that boost take-home pay kill mortgage applications. Both bank statement and P&L loans solve this by ignoring tax returns entirely.
The difference comes down to how you document income and which version of your earnings story gets you approved. One uses raw deposits, the other uses CPA-prepared financials.
Bank statement loans calculate income from 12 or 24 months of business or personal account deposits. Lenders apply an expense ratio—typically 25% to 50%—then use what remains as qualifying income.
You need consistent deposits and clean banking records. No CPA required, but scrutiny on large one-time transfers is intense since lenders distinguish business revenue from loan proceeds or transfers.
Rates vary by borrower profile and market conditions. Expect rates 1 to 2 points above conventional with 10% to 20% down minimum for most programs.
P&L loans rely on a CPA-prepared profit and loss statement covering at least one year. Some lenders want a balance sheet too, but the P&L drives income calculation.
Your CPA signs off that the numbers reflect business performance. Lenders verify the CPA license is active and may request supporting docs like invoices or contracts if income jumps sharply year-over-year.
Rates vary by borrower profile and market conditions. P&L loans often price slightly better than bank statement deals when your CPA shows strong net income.
Bank statement loans work off raw cash flow, so high-volume businesses with thin margins qualify easier than P&L routes. P&L loans favor borrowers whose accountants show healthy net profit even after expenses.
Cost is another split. Bank statement programs charge higher rates because deposit analysis carries more risk than CPA-verified earnings. Down payment floors sit around 10% for both, though some bank statement lenders go to 90% LTV.
Documentation speed matters in Solana Beach's competitive market. Bank statements are faster to pull together—just download PDFs. P&L loans need your CPA to draft and sign financials, adding weeks if tax season hits.
Choose bank statement loans if your business runs high revenue with low taxable profit, you lack recent CPA financials, or you need to close fast. This works well for 1099 tech contractors and cash-heavy service businesses.
Go P&L if your accountant already prepares detailed financials, your net income looks strong on paper, and you want the best available rate. Real estate investors and established S-corps fit this profile.
We see plenty of Solana Beach borrowers toggle between both depending on what their current year financials show. Your tax strategy shifts, your loan option shifts with it.
You can use either business or personal accounts as long as deposits clearly show income. Mixing both is common for sole proprietors.
Lenders average the two years or use only the profitable year depending on the program. A strong upward trend helps overcome a prior loss.
Most lenders offer both 12-month and 24-month options. Twelve-month programs typically carry slightly higher rates.
Your CPA must hold an active license. Lenders verify this directly, so unlicensed bookkeepers or EAs won't qualify.
Bank statement loans usually work faster since new businesses lack full-year CPA financials. You need at least 12 months of consistent deposits.