The DL on P&L Loans

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Profit & Loss Statement-Based Loan Qualification



US business owners and self-employed individuals enjoy a distinct advantage under the US tax code. It permits them to offset portions of their taxable income through deductions – reducing their overall tax liability.


However, they face challenges when applying for mortgages due to income documentation requirements that may not accurately reflect their earnings. 


P&L loans, also known as Profit and Loss Statement loans, present a highly advantageous Non-QM (Non-Qualified Mortgage) alternative designed for self-employed individuals and business owners. These loans leverage company earnings and expenses to determine loan eligibility, thereby simplifying the process of obtaining a home loan. 


While we cannot provide tax advice, we can provide you with all the information that you need about P&L loans. Let’s dive in. 


Benefits of P&L Loans

Fewer loan requirements: Similar to bank statement loans, P&L loans obviate the need to rely on tax returns, and owing to their classification as Non-QM loans, they entail fewer loan requirements.


A P&L loan solely necessitates the submission of a profit and loss statement prepared and signed by a Certified Public Accountant. Unlike a traditional mortgage, with a P&L, there is no need for income documentation such as tax returns, W2s, 1099 forms or even bank statement deposits reflecting the past 12 months.


Simple & streamlined: The lender, much like us at Defy Mortgage, will rely on a certified one-year profit and loss statement to establish the borrower’s qualified income for loan eligibility. Because of this, the process is both fast and easy.


Assessing profitability: Self-employed individuals and business owners can leverage P&L statements to assess the profitability of their business, enabling them to identify opportunities for enhancing it through strategic adjustments to revenue generation and expense management.


On our own terms: P&L loans allow you flexibility in determining what loan structure is right for you. At Defy, we offer 30-year fixed-rate, adjustable and interest-only rate options. More on our products here.


Who Are P&L Loans For?

P&L loans are ideal for self-employed individuals, business owners and others whose income might not be reflected on their tax returns – oftentimes due to write-offs and business deductions.


They offer considerable flexibility in contrast to conventional/traditional loans – catering to the distinctive needs of self-employed borrowers and business owners who are looking to purchase or refinance.


The P&L Calculation Process

The profit and loss statement gives a comprehensive view of a business's net income, considering revenue and expenses in a certified year-to-date statement. 


Unlike bank statements and tax returns, it accurately reflects the income of self-employed individuals and business owners by accounting for deductible business expenses – providing an accurate representation of their actual income and reduced tax liability. 


P&L Loans with Defy Mortgage

  • CPA prepared and signed P&L
  • Could require as little as only 10% down on a purchase loan
  • Up to 90% LTV
  • Down to a 600 FICO (reduced LTV)
  • Loans up to $6M
  • No tax returns, 1099s or bank statements
  • 30-year fixed, adjustable, interest-only options
  • Borrowers must be self-employed for at least two (2) 
  • Business must be in existence for at least two (2) years


Is a P&L Loan Right for You?

If you are self-employed, a business owner, have non-traditional income, or have difficulty documenting your income through traditional means, a P&L loan is worth looking into. 


At Defy Mortgage, we have an expert team of mortgage specialists ready to help business owners of all scales. If you are seeking a flexible, accessible, and straightforward home loan for purchasing or refinancing, we can assist you.


Get a fast mortgage rate quote now and schedule a complimentary 1-on-1 consultation with us. We look forward to hearing from you!


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