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in Petaluma, CA
Self-employed borrowers in Petaluma face a choice when proving income. Both bank statement loans and P&L statement loans get deals approved without tax returns.
The difference comes down to how lenders calculate your qualifying income. One pulls directly from deposits, the other relies on CPA-prepared financials.
Most Sonoma County borrowers pick the wrong option first. Understanding how each program analyzes your earnings prevents declined applications.
Bank statement loans use 12 or 24 months of business or personal bank statements to verify income. Lenders average your deposits and subtract a percentage for expenses.
Most programs allow 50-75% of deposits to count as income. You need consistent monthly deposits and minimal NSFs or overdrafts.
Credit minimums start at 620 for most bank statement programs. Down payments range from 10-20% depending on loan amount and credit profile.
Processing takes 3-4 weeks once you provide statements. Underwriters flag large one-time deposits that skew your average monthly income.
P&L statement loans require a CPA-prepared profit and loss statement covering 12-24 months. The net income on your P&L becomes your qualifying income.
You must use a licensed CPA or enrolled agent. Self-prepared QuickBooks reports get declined even if accurate.
These loans typically require 15-20% down and 640+ credit. Lenders verify your CPA's license and may request a full business tax return for larger loans.
Approval hinges on consistent profitability shown on your P&L. Seasonal businesses need year-over-year documentation to smooth income fluctuations.
Bank statement loans look at cash flow. P&L loans look at reported profit. If you write off heavy expenses, bank statements show higher qualifying income.
Bank statement programs calculate income automatically from deposits. P&L programs use the bottom line your CPA reports, which includes all deductions.
Cost differs significantly. Bank statement loans run 0.5-1% higher in rate because lenders view deposit analysis as riskier than CPA-verified earnings.
Documentation speed favors bank statements. You can pull 24 months of statements in minutes. Getting a CPA to prepare historical P&Ls takes 2-4 weeks.
Choose bank statements if you maximize tax write-offs. Petaluma contractors and consultants who expense heavily qualify for more using deposits than P&L net income.
Pick P&L loans if you show strong net profit and want lower rates. Real estate agents and service businesses with clean books save thousands in interest.
Your CPA relationship matters. No existing CPA means bank statements avoid the cost and delay of hiring one just for mortgage qualification.
Run both calculations before applying. Ask your broker to estimate qualifying income under each program based on actual statements and P&L numbers.
Yes, most lenders accept either or a combination. Business accounts work better if you run all income through them consistently.
Your CPA must hold an active license in any state. California licensing is not required for national CPA credentials.
Bank statement loans close 1-2 weeks faster. You control statement delivery while CPA schedules add delays to P&L preparation.
Yes, but it restarts underwriting. Most Sonoma County brokers run both scenarios upfront to avoid switching costs.
Most bank statement lenders cap at 10 financed properties. P&L programs often allow unlimited investment properties with strong financials.