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in Redwood City, CA
Self-employed borrowers in Redwood City have two main paths to qualify for a mortgage. Bank statement loans use deposits to calculate income. P&L loans rely on a CPA-prepared profit and loss statement.
Both options solve the same problem—proving income without W-2s. The right choice depends on how you run your books and what a lender will see when they dig into your finances.
Bank statement loans qualify you based on deposits over 12 or 24 months. Lenders apply an expense factor—usually 25% to 50%—then use the remainder as qualifying income. This works well if you have strong cash flow but take heavy write-offs.
You'll need consistent deposits and clean banking activity. Lenders flag large one-time deposits, frequent NSFs, or commingled accounts. The cleaner your statements, the smoother the approval. Most programs accept personal or business accounts.
P&L loans use a CPA-prepared statement to document income. The lender reviews your profit margin and uses that number to qualify you. This route works if your tax returns don't reflect true earnings or if you're ramping up a new business.
You'll need a licensed CPA to prepare the statement—self-prepared documents don't count. Lenders usually want at least 12 months in business, though some accept shorter histories with strong financials. Expect scrutiny on expense ratios and revenue consistency.
Bank statement loans show what actually flowed through your accounts. P&L loans show what you reported as profit. If you write off everything and run lean on paper, bank statements usually qualify you for more. If your deposits are inconsistent but your P&L is solid, the P&L route makes more sense.
Cost and hassle differ too. Bank statements are faster—you download PDFs and send them in. P&L loans require hiring a CPA, which adds time and expense. Rates are similar since both fall under non-QM guidelines. Expect 7% to 9% as of February 2026, depending on credit and down payment.
Choose bank statements if your deposits are steady and you want a faster process. This works for contractors, consultants, and business owners who take aggressive deductions. You'll qualify based on what you actually bring in, not what you report to the IRS.
Go with a P&L loan if your bank activity is messy or seasonal. This fits businesses with lumpy cash flow—like real estate agents or project-based contractors. You'll need a clean CPA-prepared statement, but it gives you more control over how income is presented.
No. Lenders pick one method per file. You'll go with whichever shows stronger qualifying income based on your situation.
Bank statement loans usually need 12-24 months of history. P&L loans may accept less if financials are strong and CPA-verified.
Rates are similar—both are non-QM products. Your credit score and down payment matter more than which income method you use.
Switching restarts underwriting. Pick the right path before submitting—changing methods adds weeks to your timeline.
Find a CPA who works with mortgage borrowers. Many tax preparers don't handle lending documentation—you need one who does.