A Profit & Loss (P&L) Loan is a mortgage program designed for self-employed borrowers who want to qualify without providing traditional tax returns.
Instead of relying on IRS-reported net income, the lender uses a CPA- or tax-preparer-prepared Profit & Loss statement to show the business’s revenue, expenses, and net income over a set period—usually the last 12 or 24 months.
Key characteristics:
- No tax returns required – The P&L replaces them as the primary income document.
- Must be prepared by a CPA, accountant, or tax professional – Ensures credibility for underwriting.
- May require supporting bank statements – Often 3–6 months to confirm the cash flow matches the P&L.
- Flexible property options – Can be used for primary homes, vacation homes, or investment properties.
- Higher down payment – Typically 10–20% minimum.
Why it’s beneficial:
- Qualifies borrowers with high gross income but low taxable income – Perfect for business owners who reinvest or write off heavily.
- Fast and simple documentation – One P&L statement can replace stacks of financial paperwork.
- Protects privacy – No need to disclose full tax returns to the lender.
- Customizable to your business reality – Reflects current financial performance rather than past years that may have been lower.
- Enables higher loan amounts – Lenders base approval on real operational income, not tax-adjusted figures.