Loading
in Vallejo, CA
Self-employed borrowers in Vallejo face a choice: verify income with bank statements or P&L statements. Both are non-QM options that bypass traditional tax returns, but the documentation path you choose affects your rate and approval odds.
Most self-employed borrowers write off significant expenses, making tax returns a poor reflection of actual income. These two loan types solve that problem differently, and understanding which fits your business structure matters before you apply.
Bank statement loans analyze deposits over 12 or 24 months to calculate qualifying income. Lenders add up your business deposits and apply an expense ratio, typically 25-50% depending on your industry.
This option works for borrowers with consistent deposits but messy books. You don't need a CPA or formal accounting. Most lenders require 10-20% down and credit scores around 620-640 minimum.
The trade-off is rates about 1-2% higher than conventional loans. You're paying for flexibility, but approval happens faster since underwriting is simpler than dissecting tax returns or P&Ls.
P&L statement loans require a CPA-prepared profit and loss statement, usually covering the most recent 12-24 months. Some lenders also want a balance sheet and year-to-date P&L if you're applying mid-year.
This route suits established businesses with proper accounting already in place. The income calculation is cleaner because it's reviewed by a licensed CPA, which lenders view as more reliable documentation.
Rates tend to run slightly lower than bank statement loans, sometimes 0.25-0.75% better. But you're paying a CPA to prepare the statements, and underwriting takes longer as lenders verify the numbers match your business reality.
The biggest split is documentation complexity. Bank statement loans just need deposits visible in your account. P&L loans require formal accounting that matches your business structure and CPA sign-off.
Income calculation differs too. Bank statements use a blanket expense ratio on deposits. P&L loans use actual reported profit, which can help or hurt depending on how aggressive your write-offs are.
Rates favor P&L loans by a quarter to three-quarters of a point in most cases. But factor in CPA fees and longer timelines. If you're buying in a competitive Vallejo market, speed might justify the bank statement route despite higher cost.
Choose bank statement loans if you run a cash-heavy business, lack formal accounting, or need to close quickly. This works well for contractors, gig workers, and small operators who keep business and personal funds somewhat mixed.
Go with P&L loans if you already pay a CPA for bookkeeping, run an established LLC or S-corp, and want the lowest possible rate. The extra documentation hassle pays off when you're borrowing larger amounts in Vallejo's market.
Your lender access matters too. Not all wholesale lenders offer both programs with the same flexibility. We shop 200+ lenders to find who offers the best terms for your specific business structure and income pattern.
Most lenders require one or the other, not both. If you have a P&L, lenders typically want that as primary income documentation.
Yes, both programs allow investment property purchases. Bank statement loans sometimes offer more flexible DTI ratios for investors.
Most lenders require 12 or 24 months. The 24-month option often qualifies you for better rates since it shows longer income consistency.
The CPA must be licensed and in good standing. California licensing is preferred but not always required depending on lender guidelines.
Switching restarts underwriting and delays closing. Choose your documentation path before applying to avoid timeline issues.