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in San Carlos, CA
San Carlos self-employed buyers have two main paths to prove income without W-2s. Bank statement loans pull from 12-24 months of deposits. P&L loans use a CPA-prepared financial statement.
Both are non-QM products built for business owners who write off most income. Your choice depends on how you manage your books and what documentation you already have ready.
Bank statement loans analyze deposits from your business or personal accounts. Lenders calculate income by averaging 12 or 24 months of deposits, then applying a percentage to account for expenses.
You'll typically need a 10-20% down payment and a 620+ credit score. Most lenders use a 50% expense factor, meaning they count half your deposits as income. No CPA required.
P&L loans require a CPA-prepared profit and loss statement covering 12-24 months. The CPA must be licensed and independent. This shows your business net income after expenses.
These loans often get better rates than bank statement programs because the documentation is more formal. You'll still need 10-20% down and solid credit. Expect more scrutiny on business structure.
Bank statement loans are faster to document. If you already track deposits, you're halfway done. P&L loans take longer because you need a CPA to prepare formal statements, which can take weeks.
Rates typically favor P&L loans by 0.25-0.5% because lenders view CPA-verified income as more reliable. But bank statement loans work when your P&L shows heavy write-offs that hurt qualifying income.
Use bank statements if you don't have a CPA relationship or your business shows minimal profit on paper. This works for gig workers, contractors, and cash-heavy businesses. Speed matters here too.
Choose P&L if you have clean books and a CPA already preparing financial statements. The rate difference adds up on San Carlos home prices. You'll also build a stronger file for future refinances.
Some lenders allow hybrid approaches, but most require you to pick one method. Bank statements are more common for mixed documentation scenarios.
Most lenders want 24 months in the same business. Some accept 12 months with strong deposits or a solid P&L showing growth.
It depends on your books. Bank statements often show more income if you have high deposits. P&L wins if your net profit is strong.
Yes, but it restarts underwriting. Choose your documentation path before applying to avoid delays and re-verifications.
Both methods average income over 12-24 months, which smooths seasonal swings. Longer lookback periods help if you have uneven cash flow.