Profit and loss (P&L) only mortgage loans for business owners.

Normally a CPA, an IRS enrolled agent or a state-registered tax preparer, who must be independent of the business. A statement you prepare yourself is not accepted.

No. The statement takes the place of tax returns for your income. Do not send them unless your loan officer asks.

Usually a few. In most programs the lender asks for the latest two or three months of business bank statements to confirm the revenue the statement shows. A few programs can waive them when the preparer confirms they filed your tax returns. That is far fewer than a bank statement loan, which uses one or two years of statements.

The business’s net profit for the period, adjusted for your share of ownership and for non-cash items such as depreciation, averaged by month. The calculator’s profit and loss method shows the arithmetic with your own figures.

Most programs want at least two years in the business and a meaningful ownership share. Proof is a tax professional’s letter, an operating agreement, a licence or a state filing.

Usually the last twelve months. Some programs accept or ask for two years.

Yes. A co-borrower’s wage income can be added, documented the usual way.

Yes. Primary homes, second homes and rental properties are all possible; the largest financing is on a primary home. A loan officer can tell you which programs fit the home you have in mind.

Yes. The lender reviews the signed statement, confirms the preparer is independent of the business, confirms the revenue against your recent business bank statements in most programs, and checks your credit, savings and the home’s value. For a home you live in, the lender must make a good-faith decision that you can repay the loan.

A P&L mortgage, or profit and loss loan, is a home loan for a self-employed borrower that shows income with a profit and loss statement for the business, prepared and signed by an independent tax professional, instead of tax returns. The business’s net profit, adjusted for your share of ownership and for non-cash items such as depreciation, is the income. Your credit, your savings and the home are checked as on any mortgage.

No. It is sometimes called low-doc because tax returns are not used, but it is not a stated-income loan: income, credit, assets and the home are all verified. The signed statement replaces tax returns as the income document, and in most programs recent business bank statements confirm the revenue it shows. For a home you live in, the lender must still make a good-faith decision that you can repay the loan.

It depends on how your income is shown. On a standard loan, usually your tax returns. On alternative documentation loans, other papers take their place: bank statements on a bank statement loan, your 1099 forms on a 1099 loan, or, on this loan, a profit and loss statement your tax professional signs, usually with a few recent business bank statements. Almost every route also asks for photo identification, proof the business exists and is open, and statements for the down payment, closing costs and savings after closing. See mortgage documents for the self-employed.

The one that shows your income most clearly. A bank statement loan reads the deposits in one or two years of statements. A profit and loss loan suits a business whose deposits do not tell the story, such as one with several accounts, large one-off receipts, or costs paid before the money reaches the bank, and in most programs it asks for a few recent business bank statements rather than one or two years of them. A loan officer can compare both for your file.

The document the income comes from. A 1099 loan works out your income from your 1099 forms, and suits independent contractors and commission earners. A profit and loss loan uses a statement for your business, prepared and signed by an independent tax professional, and suits business owners. Neither uses your tax returns for income. If you are choosing between deposits and 1099 forms, see bank statement or 1099 loan.

Yes. A profit and loss loan can buy a home or refinance the one you have, and your income is worked out the same way. If you want to take cash out, ask your loan officer which programs allow it for your file.

Usually because of write-offs. On a standard loan, income comes from your tax returns: the net income left after write-offs, averaged over recent years, with non-cash deductions such as depreciation added back. When legitimate deductions leave little taxable income, a profit and loss statement, or bank statements, can show the business’s income another way. Your income is still verified. Questions about your deductions are for your tax adviser.

Fidelity Residential is licensed in many states. The full, current list is on NMLS Consumer Access (opens in a new tab), or call us at 732-686-9999.