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in San Luis Obispo, CA
Self-employed borrowers in San Luis Obispo have flexible income documentation options beyond traditional W-2 verification. Bank statement loans and profit & loss (P&L) statement loans both serve self-employed professionals, but they use different methods to verify your income.
Both are non-QM mortgage products designed for business owners, freelancers, and entrepreneurs who can't show standard employment documentation. Understanding which approach matches your financial recordkeeping helps you move forward with confidence.
Bank statement loans analyze 12 to 24 months of your business or personal bank deposits to calculate qualifying income. Lenders review your statements to identify business revenue and apply a percentage (typically 50-75%) to determine your income for qualification purposes.
This option works well if you maintain consistent bank records but don't have formal P&L statements prepared by a CPA. The underwriter examines deposit patterns rather than tax returns, which often show lower income due to business deductions.
You'll need consecutive months of statements with clear business activity. Rates vary by borrower profile and market conditions, with down payment requirements typically starting at 10-20%.
Profit & loss statement loans require CPA-prepared financial statements showing your business income and expenses. Your accountant creates a detailed P&L that demonstrates your business profitability and cash flow over a specific period.
This approach suits borrowers who already work with a CPA for tax planning and business accounting. The formal financial statement provides detailed income verification that some lenders prefer over bank deposits alone.
You'll need a licensed CPA to prepare and sign your P&L statement. Rates vary by borrower profile and market conditions, with qualification based on the net income shown in your financial documents.
The main difference lies in documentation requirements. Bank statement loans need only your banking records, while P&L loans require professional accounting services. If you don't currently work with a CPA, bank statement loans offer a faster path.
Income calculation methods also vary. Bank statement lenders apply a percentage to your deposits, while P&L loans use your accountant's bottom-line net income figure. Business owners with significant write-offs may qualify for more with bank statements.
Cost considerations include CPA fees for P&L preparation versus the simplicity of gathering bank statements yourself. Both programs typically require similar down payments and serve borrowers who can't use traditional income verification.
Choose bank statement loans if you maintain organized banking records but don't have a CPA relationship. This path works well for freelancers, gig workers, and small business owners who handle their own bookkeeping and want straightforward documentation.
Select P&L statement loans if you already work with a CPA for tax planning and business finances. This option suits established businesses with formal accounting practices and owners who prefer detailed financial documentation.
Consider your current recordkeeping system and timeline. Bank statements can often be pulled quickly from your financial institution, while CPA-prepared P&Ls may take additional time to create if you don't have recent statements ready.
Yes, many bank statement loan programs accept personal bank statements if they show clear business deposit activity. Some lenders even allow a combination of personal and business accounts for income calculation.
Most lenders require P&L statements covering the most recent 12-24 months, prepared within 90 days of your application. Your CPA must sign and date the documents to verify accuracy.
Down payment requirements are generally similar for both programs, typically 10-20% or more depending on your credit profile. Specific requirements vary by borrower qualifications and property type.
Bank statement loans often process faster if you have statements readily available. P&L loans may take longer if your CPA needs time to prepare current financial statements.
You can typically switch documentation methods early in underwriting if needed. Work with your loan officer to determine which approach best fits your available documentation and qualification strength.