What is a P&L Loan?

A P&L loan (Profit and Loss loan) is a type of bank statement or non-QM loan designed for self-employed borrowers who may not show enough income on tax returns but can prove their business income using Profit and Loss statements instead. These are common among business owners, freelancers, and independent contractors.

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Basic Requirements for a P&L Loan

1. Self-Employed for at Least 2 Years

  • Typically required, but some lenders accept 1 year with a strong financial profile.

2. Profit & Loss Statement

  • Must be prepared by a licensed CPA or tax preparer
  • Covers 12 or 24 months (lender will specify)
  • Should detail gross income, expenses, and net profit

3. Business Bank Statements (Optional)

  • Some lenders require 2–6 months of statements to support the P&L
  • Helps verify income consistency

4. Credit Score

  • Minimum score usually ranges from 660 to 700
  • Better rates with higher credit

5. Down Payment

  • Typically 10–30% depending on credit and loan amount
  • Investment properties may require more

6. Reserves

  • May need 3–12 months of mortgage payments in savings after closing

7. Debt-to-Income Ratio (DTI)

  • Based on P&L income instead of tax returns
  • Max DTI usually around 45–50%

8. Valid ID and Business Documentation

  • Driver’s license or passport
  • Business license, LLC docs, or EIN letter

🧾 Documents You’ll Likely Need

  • CPA-prepared P&L statement (12–24 months)
  • Business bank statements (2–6 months)
  • Government-issued ID
  • Business license or proof of self-employment
  • Credit report (run by the lender)

Carefully evaluate your options and speak with Jessica Herbert - Paramount Residential Mortgage Group, Inc to determine which type of P&L Loan is right for you.