Lending
Profit and Loss Loans in the Sacramento Region
Home loans for business owners that show income with a profit and loss statement, often prepared by a CPA or tax preparer.
Talk to Maggie directly: cell (916) 549-3131 (text or call) · maggie@loveyoursurroundings.coMaggie B. Hopkins, NMLS #349517 · Surroundings NMLS #2528307
What is a profit and loss loan?
A profit and loss loan, often called a P&L loan, is a home loan where your income is shown with a profit and loss statement for your business. The statement lists what the business brought in, what it spent and what was left over. The lender uses that bottom line as your income.
It is one kind of Non-QM loan. That means it doesn't follow the standard Qualified Mortgage rules, which generally expect income verified with documents like tax returns. The lender still has to make a good-faith effort to determine that you can repay, as the CFPB explains on its page "What is a Qualified Mortgage?" (last reviewed January 2, 2025).
Who is a profit and loss loan a good fit for?
It tends to fit business owners whose current profits are stronger than their last tax return shows. That might be a business that grew this year, or one that took large write-offs last year.
It can also fit you if your deposits are hard to read, for example when you run several accounts or move money around a lot. In that case a clear statement from your tax preparer may tell the story better than months of bank statements. Compare it with a bank statement loan to see which one reads your income more fairly.
Who prepares the P&L, and what else will the lender ask for?
Many lenders want the profit and loss statement prepared or signed by a licensed CPA, an enrolled agent or another tax preparer. Some will accept one you prepare yourself with extra support. Ask each lender which they require before you have one made.
Lenders commonly ask for some of these too:
- The P&L itself, usually covering the last 12 or 24 months.
- A few months of business bank statements, so the lender can see that deposits roughly match the sales on the P&L. Some programs pair the two.
- Proof of the business, such as a business license or a letter from your tax preparer about how long you've been in business.
- Assets, credit and identification, the same as any home loan.
Rules differ a lot between lenders. That's where a broker who compares many of them helps.
How does a lender use the P&L to qualify you?
The lender takes the net profit on the statement and turns it into a monthly income figure. Then it compares that income with your new house payment and your other debts, the same way it would for any loan.
The lender will look for the P&L to make sense. If it shows strong sales, the lender may want bank statements showing deposits that support it. If your share of the business is less than all of it, the lender usually counts only your share.
Your tax preparer's role matters here. A preparer who signs the statement is putting their name on it, so ask them early whether they're willing to do that and how long it takes.
What does a P&L loan cost compared with a standard loan?
A P&L loan generally costs more than a Qualified Mortgage for the same borrower and home. The rate is often higher, and lenders may ask for a larger down payment or more money in reserve. That reflects the extra risk the lender takes when income isn't verified with tax returns.
We compare several approved lenders and show you each one's rate, costs at closing and monthly payment in dollars. Test your budget first with our mortgage calculator.
What are the trade-offs and risks?
- Higher cost over the life of the loan than a comparable standard loan.
- Fewer lenders offer it. P&L programs are less common than bank statement programs, so choices can be narrower.
- Your numbers must hold together. A P&L that doesn't match your deposits can slow or stop the loan.
- Loan features to read closely, such as a prepayment penalty or an interest-only period. Ask about each one and get it in writing.
What are the alternatives to a P&L loan?
If your tax returns show enough income, a standard loan is usually worth comparing first. Fannie Mae's Selling Guide (topic B3-3.5-01, dated December 13, 2023) generally looks for two years of self-employment history, shown with signed tax returns. It allows one year of returns in limited cases. A conventional loan built on those returns generally costs less.
Other options to compare:
- Bank statement loans, which use 12 or 24 months of deposits instead of a P&L.
- DSCR loans, if the home is a rental and the rent can carry the payment.
How do you start a P&L loan?
Fill out the loan options form or call Maggie's cell at (916) 549-3131. Tell us about your business, who does your taxes and what you're buying or refinancing.
Maggie B. Hopkins is a mortgage broker, so she can compare P&L programs with bank statement and standard loans across a network of approved lenders. You're always free to use any lender you like. Bring your last two tax returns and a recent P&L if you have one, and we'll tell you what else each lender wants.
Frequently Asked Questions
Does a CPA have to prepare my profit and loss statement?
It depends on the lender. Many want it prepared or signed by a CPA, enrolled agent or other tax preparer. Ask each lender before you have one made.
How many months does the P&L need to cover?
Usually 12 or 24 months, depending on the program. Some lenders also ask for a few months of business bank statements to back it up.
Is a P&L loan the same as a bank statement loan?
No. A bank statement loan works out your income from deposits. A P&L loan uses the net profit on a profit and loss statement. Some programs use both together.
Do P&L loans cost more?
Generally, yes. They usually cost more than a comparable Qualified Mortgage because the lender takes on more risk. We show you the costs from several approved lenders in dollars.
Talk to Maggie directly: cell (916) 549-3131 (text or call) · maggie@loveyoursurroundings.coMaggie B. Hopkins, NMLS #349517 · Surroundings NMLS #2528307
Loans are arranged through Maggie B. Hopkins, NMLS #349517 · Surroundings NMLS #2528307. This is not a commitment to lend. All loans subject to credit approval and property qualification. Equal Housing Lender.
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