Profit & Loss Loans
Qualify Using Your CPA-Prepared P&L Statement
Profit and loss loans through Howell Mortgage Group allow self-employed borrowers to qualify for home financing using a CPA-prepared profit and loss statement instead of tax returns. This non-QM program recognizes that many business owners show lower income on tax filings due to legal deductions, and uses the P&L to reflect actual business performance and borrowing capacity
What Are Profit and Loss Loans?
A profit and loss loan (P&L loan) is a non-QM mortgage product that uses a CPA-prepared profit and loss statement as the primary income documentation for self-employed borrowers. Instead of analyzing two years of tax returns that may show artificially low income due to business deductions, the lender evaluates the borrower’s actual business revenue and profitability as reported by their accountant.
P&L loans solve a common problem in mortgage lending: self-employed individuals who earn strong income but show modest figures on their tax returns. Business owners routinely deduct vehicle expenses, home office costs, depreciation, meals, travel, and other legitimate expenses that reduce taxable income. These deductions are smart tax strategy, but they create a gap between actual earning power and the income figure a conventional lender would use.
By accepting a CPA-prepared P&L statement, lenders can assess the borrower’s true financial capacity and offer mortgage financing that reflects their real-world earnings rather than their tax-optimized income.
P&L Loan Requirements
CPA-Prepared P&L Statement
A profit and loss statement covering the most recent 12 or 24 months, prepared and signed by a licensed CPA or enrolled agent. The statement must include gross revenue, expenses, and net profit.
Down Payment
Typically 10% to 20% of the purchase price. Programs with 10% down may require a credit score of 700 or higher.
Self-Employment
Minimum two years of self-employment history. A business license, articles of incorporation, or similar documentation confirming your business entity is required.
DTI Ratio
Maximum debt-to-income ratio of 43% to 50%, calculated using the net income figure from the P&L statement.
Credit Score
Minimum scores range from 620 to 680 depending on the lender, down payment, and loan amount. Higher scores qualify for better rates and terms.
Reserves
3 to 12 months of mortgage payment reserves in liquid assets after closing, depending on the loan amount and lender.
How P&L Loans Work
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Obtain Your P&L Statement
Have your CPA or enrolled agent prepare a detailed profit and loss statement for the most recent 12 or 24 months. The statement must be signed and include their license number. -
Apply with Howell Mortgage Group
Submit your application along with the P&L statement, business documentation, credit authorization, bank statements, and identification. -
Income Verification
The lender reviews the P&L statement, may contact your CPA to verify authenticity, and cross-references the reported figures with your bank deposits. -
Appraisal and Underwriting
A property appraisal confirms market value. The underwriter evaluates your P&L income, credit profile, reserves, and DTI ratio. -
Approval and Rate Lock
Once approved, lock in your interest rate and receive a commitment letter with final terms and conditions. -
Closing
Sign closing documents, fund the down payment and closing costs, and take ownership of your home or investment property.
Benefits of P&L Loans
No Tax Returns Requirement
Bypass the problem of tax-return income that does not reflect your true earning power. Your CPA’s professional assessment of your business income drives the qualification.
Multiple Property Types
P&L loans finance primary residences, second homes, and investment properties, providing flexibility for self-employed borrowers across property categories.
Simpler Documentation
A single P&L statement replaces multiple years of tax returns, K-1s, schedules, and business entity returns that make conventional self-employed applications complex.
Competitive Rates
While slightly higher than conventional rates, P&L loan pricing is competitive within the non-QM market and has improved as more lenders offer these programs.
Reflects True Income
Your CPA can account for one-time expenses, non-recurring deductions, and other factors that artificially depressed your taxable income in a given year.
Who Should Consider a P&L Loan?
P&L loans are designed for self-employed professionals whose tax returns do not accurately represent their income. If you are a small business owner, freelancer, independent contractor, or gig worker who uses legitimate business deductions to minimize your tax liability, a P&L loan lets your CPA present your actual financial picture to the lender.
Business owners in industries with high gross revenue and significant operating expenses are prime candidates. Contractors, restaurant operators, medical practice owners, consultants, and e-commerce sellers frequently show modest net income on tax returns despite earning substantially more in real cash flow.
If you have been turned down for a conventional mortgage because your tax return income was too low, or if your loan officer told you to “stop taking so many deductions,” a P&L loan offers an alternative path that does not require changing your tax strategy to qualify for a home loan.
How Does This Compare?
Feature | P&L Loan | Bank Statement Loan | Conventional | FHA |
|---|---|---|---|---|
Best For | Business owners with CPA | Freelancers/gig workers | W-2 employees | First-time buyers |
CPA Involvement | Required | Optional | None | None |
Down Payment | 10-20% | 10-20% | 3-20% | 3.5% |
Min Credit Score | 620-680 | 600-680 | 620 | 580 |
Self-Employment Required | Yes (2+ years) | Yes (2+ years) | No | No |
Income Documentation | CPA P&L statement | 12-24 months bank statements | Tax returns + W-2s | Tax returns + W-2s |