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in Vista, CA
Vista's self-employed borrowers have two main paths to mortgage approval without traditional W-2s. Both use actual business income rather than tax returns, but they verify that income differently.
The choice between bank statements and P&L statements comes down to how your business handles cash flow and whether you work with a CPA. Most borrowers qualify for one option more easily than the other.
Bank statement loans calculate income from 12 or 24 months of business or personal bank deposits. Lenders average your monthly deposits and apply an expense factor, typically 25-50% depending on your business type.
This works well for cash-heavy businesses or contractors who run expenses through the account. You need consistent deposits without major gaps or seasonal swings that kill your average.
Most lenders want 620+ credit and 10-20% down. Rates run 1-2% higher than conventional loans because underwriters spend more time analyzing deposit patterns instead of reading a tax return.
P&L statement loans use a CPA-prepared profit and loss statement covering 12-24 months. Your accountant shows revenue minus expenses, and that net income qualifies you for the mortgage.
This path makes sense if you already work with a CPA and have clean books. The lender verifies your CPA's license and reviews the statement for red flags like negative cash flow or inconsistent revenue.
Requirements mirror bank statement loans: 620+ credit, 10-20% down, similar rate premiums. The main difference is you need a licensed CPA relationship and formal financial statements.
The bank statement route costs less upfront since you skip CPA fees. You just upload statements directly from your bank. P&L loans require paying an accountant to prepare formal statements, adding $500-2,000 to your closing costs.
Income calculation differs significantly. Bank statements use gross deposits minus a standard expense factor. P&L statements show actual expenses your CPA tracked, which usually results in lower stated income but more accurate numbers.
Approval odds flip based on your business structure. Bank statements favor high-deposit, low-expense businesses like consultants. P&L statements work better for capital-intensive businesses with major documented expenses.
Choose bank statements if you don't use a CPA, run a simple business structure, and show consistent deposits. This path closes faster because there's no accountant involved and underwriters just analyze deposit patterns.
Go with P&L statements if you already maintain formal books, have significant deductible expenses, or operate a complex business. The CPA verification adds time but often reveals higher qualifying income than the bank statement method.
Vista self-employed borrowers often try bank statements first since it's cheaper and faster. If deposits don't support enough income, we switch to P&L and let your actual expense tracking do the work.
Either works. Many sole proprietors run income through personal accounts. Lenders just need to see consistent deposits that reflect your business revenue.
CPA-prepared is sufficient. Full audits cost thousands and aren't required. Your CPA signs off confirming the numbers, and lenders verify their license.
Seasonal patterns hurt bank statement loans since lenders average all months. P&L statements handle seasonality better because they show annual income rather than monthly averages.
No. Lenders require one verification method per loan. You choose bank statements or P&L at application and stick with it through closing.
Most lenders want to see your CPA prepared the actual statements being used. A brand-new CPA relationship specifically for the loan raises fraud flags.