Question 1

Does my CPA need specific credentials to prepare the P&L?

Accepted Answer

Yes, lenders require a licensed CPA with an active credential. The P&L must be on CPA letterhead with their signature and license number. Bookkeepers or in-house statements won't work.

Question 2

Can I use a P&L loan if I've only been self-employed one year?

Accepted Answer

Most lenders want two years, but a few accept one year with strong credit and higher down payment. You'll need proof your business existed and generated income for that full year.

Question 3

What if my P&L shows profit but my tax return shows a loss?

Accepted Answer

Lenders expect this with write-offs. Have your CPA write a reconciliation letter explaining the difference. If the gap is too large without clear explanation, underwriters will question the numbers.

Question 4

Are P&L loan rates higher than conventional mortgages?

Accepted Answer

Yes, typically 1-2% higher. You're paying for flexibility on income documentation. Rates vary by borrower profile and market conditions—shop multiple lenders to find the tightest pricing.

Question 5

Can I combine P&L income with W-2 income from a spouse?

Accepted Answer

Absolutely. Many deals combine self-employed and W-2 income. The W-2 income strengthens the file and can help you qualify for better terms or a larger loan amount.

Profit & Loss Statement Loans for Self-Employed Borrowers in Woodside, CA