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in Santa Rosa, CA
Self-employed borrowers in Santa Rosa face a choice: prove income with bank statements or a CPA-prepared P&L. Both skip tax returns, but they work very differently.
Bank statement loans look at deposits over 12-24 months. P&L loans rely on a single financial statement from your accountant. Which path you take depends on how you run your business.
Bank statement loans pull your income directly from business or personal account deposits. Lenders review 12 or 24 months of statements and calculate average monthly income.
You don't need a CPA or formal books. If cash flows through your accounts consistently, you qualify. Most lenders apply a 50% expense factor to deposits, though some adjust based on business type.
Credit score minimums typically start at 620. Down payments range from 10-20% depending on property type and loan amount. Rates vary by borrower profile and market conditions.
P&L loans use a profit and loss statement prepared by a licensed CPA. The statement covers 12-24 months and shows business income after expenses.
You need organized books and a CPA relationship. The P&L must follow standard accounting practices. Some lenders also require a year-to-date statement if you're applying mid-year.
Credit requirements mirror bank statement loans—usually 620 minimum. Down payments start at 15-20%. This option works best if you already maintain formal financials for your business.
The biggest split is documentation control. Bank statements pull data you already have—no CPA needed. P&L loans require professional preparation, which costs money and takes time.
Income calculation differs too. Bank statement lenders apply expense ratios to deposits. P&L lenders use net income shown on your statement. If you write off heavy expenses, P&L might show lower qualifying income.
Processing speed varies. Bank statements can be pulled quickly if you use online banking. P&L preparation takes longer, especially if your books aren't current. Expect 1-2 weeks for CPA turnaround.
Choose bank statements if you run cash flow through your accounts but don't keep formal books. Contractors, consultants, and service businesses fit this profile well.
Pick P&L loans if you already work with a CPA and maintain detailed financials. This works for established businesses with complex expense structures or multiple revenue streams.
Santa Rosa's wine industry and tech consulting sectors often lean toward P&L loans because of existing accounting relationships. Newer businesses or those with simpler operations go bank statement route.
Yes, if business income flows through personal accounts. Most self-employed borrowers mix accounts, and lenders accept both personal and business statements.
Expect $500-1500 depending on complexity. If your CPA already prepares annual financials, they can usually generate a mortgage-specific P&L quickly.
Rates are similar since both are non-QM products. Pricing depends more on credit score, down payment, and property type than documentation method.
Lenders average the months provided, but wild swings raise questions. Seasonal businesses should provide 24 months to smooth out variations.
Yes, but it restarts underwriting. Choose your documentation method before applying to avoid delays and multiple document requests.