P&L loans for self-employed borrowers
A profit and loss loan lets you qualify on a P&L prepared by your CPA or tax preparer. It is often the simplest path when your business deposits are hard to separate.
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Overview
A profit and loss loan is a non-QM mortgage for self-employed borrowers. The lender uses a profit and loss statement covering the past 12 or 24 months, prepared or reviewed by a licensed CPA, an enrolled agent or a qualified tax preparer, in place of tax returns. Qualifying income is based on the net profit shown on the P&L. The program suits owners whose finances do not fit neatly into a bank statement review.
Some P&L programs accept the statement on its own. Others ask for a few recent bank statements to support the revenue the P&L reports, and the deposits generally need to line up with those figures. The preparer usually signs a letter confirming they prepared the P&L and know your business. Lenders also confirm your business has operated for about two years, and the loan can finance a primary home, second home or investment property.
P&L programs vary in who can sign the statement, how many bank statements are required and how income is calculated. QMS reviews your P&L before it goes to a lender, flags figures that may raise questions, and places it with the lender whose rules fit your business. We also compare it with a bank statement loan, since one may qualify you for more. All loans are subject to credit approval and lender guidelines.
Is it a good fit?
- Are self-employed and work with a CPA, enrolled agent or tax preparer
- Have tax returns that do not reflect your current income
- Mix business and personal funds across several accounts
- Have run a business with steady revenue for about two years
- Want a simpler file than a full bank statement review
What you'll need
- Profit and loss statement for the past 12 or 24 months
- Signed letter from your CPA, enrolled agent or tax preparer
- Recent business bank statements, if the lender requires them
- Proof the business exists, such as a license or state filing
- Asset statements for down payment and reserves
- Government-issued photo ID
How it works
How it works with QMS
Review the P&L
We review your statement and confirm your preparer meets the lender's credential rules.
Compare programs
We compare P&L and bank statement options to see which one qualifies you for more.
Underwrite and close
We submit your file, coordinate preparer verification and manage conditions through closing.
FAQ
Profit and Loss loan FAQs
Don't see yours? Call us or send a message. We answer the same business day.
305-425-1990Who can prepare the P&L for a mortgage?
Most lenders require a licensed CPA, an IRS enrolled agent, or a tax preparer with a PTIN who has prepared your recent tax returns. A few accept a borrower-prepared P&L when it is backed by bank statements. The preparer typically signs a letter and may be contacted to verify the document. We confirm the rules before you ask your preparer for anything.
Do I need bank statements with a P&L loan?
It depends on the lender. Some P&L-only programs need no bank statements. Others ask for two or three recent months of business statements to confirm that deposits support the revenue on the P&L. If deposits are much lower than the reported revenue, the lender may reduce your qualifying income or ask questions. We review both documents together before submission.
What is the difference between a P&L loan and a bank statement loan?
A bank statement loan calculates income from your deposits, usually with an expense factor applied. A P&L loan uses the net profit on a statement your preparer creates. If your real expenses are lower than a lender's standard expense factor, the P&L may show higher income. If your deposits are mixed and hard to explain, the P&L may also be simpler.
Can I use a P&L loan to buy an investment property?
Yes. Many P&L programs finance primary residences, second homes and investment properties. Investment purchases usually come with stricter reserve and down payment requirements. If the rental will cover its own payment, a DSCR loan may be simpler, since it does not use your business income at all. We compare both options for your scenario before you apply.
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