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in Lodi, CA
Self-employed borrowers in Lodi face a choice: prove income with bank statements or a CPA-prepared P&L. Both are non-QM options that skip traditional W-2 verification, but they require different documentation and fit different business structures.
The right choice depends on how you manage your finances. Contractors and small business owners often prefer bank statements. CPAs and incorporated businesses usually go the P&L route.
Bank statement loans use 12 to 24 months of personal or business deposits to calculate qualifying income. Lenders average your monthly deposits and apply a percentage (typically 50-75%) to account for business expenses.
This works well if you write off most expenses on your tax returns. You don't need a CPA or formal financial statements. Just provide consecutive months of bank records showing consistent deposits.
P&L statement loans require a CPA-prepared profit and loss statement covering 12 to 24 months. The lender uses your documented net profit as qualifying income, which often results in a higher usable income figure than bank statements.
This option suits borrowers with established accounting relationships. Your CPA must be licensed and third-party verified. The P&L shows cleaner income calculation but costs more to prepare upfront.
Bank statements look at cash flow, P&Ls look at profitability. If your deposits are high but your documented profit is low, bank statements win. If you keep clean books and report solid profit, the P&L gives you more buying power.
Cost and speed differ too. Bank statements require no CPA fees and process faster. P&L loans add preparation costs ($500-$2,000) and verification time but may unlock better rates if your profit margins look strong.
Choose bank statements if you're a sole proprietor with consistent deposits but heavy write-offs. Choose P&L if you run an S-corp or LLC with clean financials and an existing CPA relationship.
Rates vary by borrower profile and market conditions. Both loan types typically require 10-20% down and credit scores above 620. Lodi's mix of agricultural business owners and service professionals use both options regularly.
No. Lenders choose one income documentation method per loan. You can't mix both to maximize qualifying income.
Either works. Most lenders accept personal accounts if they show clear business income deposits. Business accounts work too.
Expect $500-$2,000 depending on business complexity. Some lenders require a full CPA review letter, which costs more.
Rates are similar for both. Your credit score and down payment matter more than documentation method for pricing.
Yes, but it restarts underwriting. Switching adds 2-4 weeks to your timeline and requires new documentation.