Loading
in Montague, CA
Both bank statement and P&L loans serve self-employed borrowers in Montague who can't verify income with W-2s. The difference is how you prove your income—and which method shows lenders a stronger picture of your earnings.
Most self-employed borrowers can qualify for either option. Your choice depends on your record-keeping habits, what your CPA already prepares, and how your monthly deposits compare to your tax returns.
Bank statement loans use 12 or 24 months of personal or business bank statements to calculate your qualifying income. Lenders look at your average monthly deposits, minus standard business expense percentages.
This works well if you take legitimate deductions that lower your taxable income. Your bank statements show what you actually earn, not what you report after write-offs.
P&L statement loans require a certified profit and loss statement prepared by a licensed CPA. Most lenders want year-to-date P&L plus the previous year's statement for income verification.
This route makes sense if your CPA already prepares quarterly or annual P&L statements for your business. The documentation process is cleaner, and lenders often view CPA-certified income as more reliable.
Bank statements reveal actual deposits but require more document pages—24 months means 48-72 statement pages. P&L loans need just a few certified pages but add CPA costs if you don't already have current statements prepared.
Bank statement programs typically allow higher debt ratios because lenders see the full cash flow picture. P&L programs lean conservative since they rely on summarized financial data rather than transaction-level detail.
Choose bank statements if you don't have a CPA relationship or your actual deposits significantly exceed your reported net income. This happens often with contractors and service providers who take maximum deductions.
Choose P&L if your accountant already prepares quarterly statements and your business shows consistent profitability on paper. This saves you from gathering two years of bank records and keeps your financial details more private.
Most lenders require one method or the other, not both. Mixing documentation types creates underwriting conflicts and typically doesn't strengthen your application.
Rates are nearly identical between the two programs. Your credit score, down payment, and property type matter more than which income documentation you choose.
Bank statement programs accept either business or personal accounts. Many sole proprietors run income through personal accounts, which works fine for qualification.
Most lenders want year-to-date P&L no older than 90 days. You'll also need the prior year's annual statement certified by your CPA.
Yes, but it restarts underwriting timelines. Choose your documentation method before applying to avoid delays on your Montague purchase or refinance.