P&L Loan

What is a P&L loan?

Our P&L loan program is the easiest way for self-employed home buyers to get approval. Business owners in the US have a unique advantage. The US tax code allows them to offset significant taxable income with deductions, which effectively reduces their tax burden.  

This has clear tax advantages to the business owner. However, the problem often arises when the business owner applies for a home loan. Still, the lender denies the application due to a lack of income and a high debt-vs-income ratio.

Why?  Because traditional loan programs (such as Conventional, Jumbo, FHA, VA, USDA) all require the lender to use the taxable income from the applicant's income tax returns (business and/or personal). This limits the lender to using only a fraction of the business owner's real income, which leaves the business owner frustrated and feeling trapped. 

Our P&L loan program solves this problem.

Rather than using tax returns, we allow the business owner to have their licensed tax preparer provide a 1-2 Year Profit and Loss (P&L) Statement as income, which often provides a more accurate portrait of the applicant's true income profile.    

There are no prepayment penalties for owner-occupied and second homes. Therefore, the loan can be refinanced if desired as soon as the applicant qualifies for a traditional home loan.  

Many of our clients use this program to buy their dream home and decide to refinance it into a traditional loan once their tax advisers determine the optimal time.  It allows the business owner to take control and buy a home on their terms.

This loan program is similar to our Bank Statement Program, but the documentation requirements are much easier than providing 12-24 months of bank statements. 

Have you been in business for less than 2 years (but over 1 year)?  

We can approve this scenario with a supporting P&L and proof that you have worked in your current industry for at least 2 years.

Some lenders offer this type of program, but very few can match our experience and success rate, making us the trusted professionals you need to make this program work for you.

 

At A Glance

Minimum Down Payment

  • 15% - for loan sizes ranging from $100,000 - $548,250 (requires a minimum TransUnion score of 700+)

  • 20% - for loan sizes ranging from $100,000 - $548,250 (requires a minimum TransUnion score of 680+)

  • 25% - for loan sizes ranging from $100,000 - $548,250 (requires a minimum TransUnion score of 600+)

  • 20% - for loan sizes ranging from $548,251 - $650,000

  • 25% - for loan sizes ranging from $650,001 - $1MM

MI (Private Mortgage Insurance)

  • None

Minimum mid-credit score

  • 600 (LTV may vary, see above)

 Min/ Max Loan Amount

  • $100,000 - $650,000

 Loan Repayment Terms

  • 30 Year Fixed Rate

  • 25 Year Fixed Rate

  • 20 Year Fixed Rate

  • 15 Year Fixed Rate

Prepayment Penalties

  • None for Owner-Occupied Homes or Second Homes.

  • Investment properties Only -  6 months interest on 80% of the original principal balance

Recent Housing Events

  • 1-day minimum

Max Seller Contributions

  • 6% for Owner-Occupied or Second Homes

  • 2% for Investment Homes

Escrows

  • Escrows for Property Taxes and Home Insurance are required

Acceptable Property Types

  • Single Family, Townhome/ Villa/ Condominium (No High rises), Multi-Family

Occupancy

  • Owner Occupied /  Second Home/ Investment