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P & L Loans

What Is a P&L Mortgage?

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A P&L mortgage (also known as a Profit and Loss-based loan) is a non-QM or alternative documentation mortgage program. Instead of relying on tax returns, the lender uses a CPA-prepared or borrower-prepared Profit & Loss statement to determine income and qualify you for the loan. It’s ideal for borrowers whose tax write-offs reduce their reported income but who maintain strong business cash flow.

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Key Benefits

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- No Tax Returns Required : Qualify using a 12- or 24-month Profit & Loss statement, verified by a CPA or tax preparer.

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- Flexible Income Verification : Lenders review your business performance instead of taxable income perfect for self-employed professionals.

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- Higher Loan Limits Available : Great for both primary residences and investment properties, with options up to and beyond $3 million depending on the lender.

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- Competitive Rates Compared to Bank Statement Loans : Often lower rates and simpler underwriting for established businesses with clean P&Ls.

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- Variety of Property Types : Eligible for single-family homes, condos, multi-unit properties, and some mixed-use or commercial assets.

Basic Requirements

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To qualify for a P&L mortgage, most lenders will look for:

  • Self-Employment: Minimum 2 years of business ownership or self-employment.

  • Credit Score: Typically 620–700+, depending on the lender and LTV.

  • Down Payment: Minimum 10–20% (varies by property type).

  • Business Documentation:

  • 12 or 24 months of P&L statements (CPA-prepared preferred)

  • Business license or proof of ownership

  • Bank statements for verification of cash flow (optional in some cases)

Who It’s For
 

This program is ideal for:​

  • Small business owners and LLC members

  • Freelancers, contractors, and gig-economy professionals

  • Investors with cash-flowing businesses

  • Borrowers with strong revenue but extensive tax deductions

Why Choose a P&L Loan Over Tax Return Qualification

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Many self-employed borrowers face challenges because their tax returns don’t reflect their true income due to deductions and write-offs.

A P&L loan offers:

  • Faster underwriting

  • More realistic income analysis

  • Greater flexibility in business structure (LLC, S-Corp, Sole Proprietor, etc.)

  • Potential for higher loan approval amounts

 

Things to Keep in Mind

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  • Interest rates may be slightly higher than standard conventional loans.

  • A CPA-prepared statement adds credibility and is often required.

  • Loan terms and guidelines vary between lenders (non-QM = flexible but lender-specific).

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