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in Fairfield, CA
Self-employed borrowers in Fairfield face a choice: prove income through bank statements or P&L statements. Both routes skip tax returns, but they differ in how lenders calculate what you qualify for.
The right option depends on how your business shows income. Some businesses look stronger on bank deposits than on CPA-prepared financials, and vice versa.
Bank statement loans use 12 or 24 months of business or personal bank statements to verify income. Lenders average your deposits and apply a percentage based on your business type.
Most programs allow 10-20% down and accept credit scores as low as 620. The underwriter looks at consistent deposit patterns, not what you wrote off on taxes.
This works well for cash-heavy businesses or borrowers who maximize deductions. Your bank activity tells the real income story, not your adjusted gross income.
P&L statement loans require a CPA-prepared profit and loss statement covering 12-24 months. Some lenders also want a balance sheet and a CPA letter certifying the numbers.
The approval process mirrors traditional loans more closely. Lenders review your business profitability as documented by a licensed accountant, not raw bank deposits.
This route suits borrowers with clean financials and an existing CPA relationship. Your accountant's reputation carries weight in the approval process.
The biggest split is documentation. Bank statement loans need no CPA—just upload your statements. P&L loans require a licensed accountant to prepare formal financials.
Income calculation differs too. Bank statement lenders apply an expense ratio to your deposits, usually 50-75%. P&L lenders use your net profit after business expenses as stated by your CPA.
Rate and down payment requirements run similar across both programs. Expect 1-2% higher rates than conventional loans and 15-25% down for best pricing.
Choose bank statements if your deposits look better than your bottom line. Contractors, cash businesses, and high-deduction operations often qualify for more this way.
Go with P&L if your accountant already prepares detailed financials and your profit margins look strong. This route feels more traditional and some lenders price it slightly better.
Many Fairfield self-employed borrowers try both options during pre-approval. We run the numbers each way and show you which path gets you the best loan amount and rate.
Yes, most bank statement programs accept personal accounts if that's where business income flows. Lenders apply a higher expense ratio since personal and business expenses mix together.
No, most programs accept a compilation or review-level P&L. Full audits help but aren't required for residential mortgages under $2 million.
It depends entirely on your business structure. Bank statements often show more income for cash businesses, while P&L works better for low-expense service businesses.
Yes, but it restarts underwriting since documentation requirements differ completely. Better to pick the right path during pre-approval based on actual income calculations.
Both programs handle purchases and rate-term refinances. Cash-out refinances work too, though max loan-to-value drops to 70-75% depending on credit and property type.