A Profit and Loss (P&L) loan is a type of non-qualified mortgage (non-QM) designed for self-employed individuals, small business owners, or those with non-traditional income sources who may struggle to qualify for conventional loans due to irregular or complex income documentation. Instead of relying on W-2 forms, pay stubs, or tax returns, lenders use the borrower’s profit and loss statements—typically prepared by a CPA or licensed tax preparer over a 12- or 24-month period—to assess income and ability to repay the loan. These statements detail business revenue, expenses, and net income, offering a clearer picture of earnings for those who use tax deductions to lower reported income.
