A P&L loan (profit and loss statement loan) is a Non-QM mortgage that qualifies a self-employed borrower on the business’s profit and loss statement instead of tax returns. If your tax returns understate what your business actually earns — because of legal deductions and write-offs — a P&L loan lets your books speak for you.
At Defy, a P&L loan requires a profit and loss statement covering 12 or 24 months, with a letter from a CPA, EA, or CTEC, at least two years of self-employment, and a business that has existed for at least two years. No tax returns, W-2s, 1099s, or bank statement deposits are required. Purchases go up to 90% LTV — as little as 10% down — with loans up to $6 million and FICO down to 640. P&L loans are available in 39 states.
If your books are clean and your deposits are messy, P&L is usually the cleaner path. If your deposits tell a stronger story than your books, a bank statement loan may qualify you for more. We offer both, and we will tell you honestly which one fits your file.
Defy’s P&L loan specs
| Spec | Defy P&L loan |
|---|---|
| Income document | Profit and loss statement covering 12 or 24 months, with a letter from a CPA, EA, or CTEC |
| Self-employment history | At least 2 years |
| Business history | In existence at least 2 years |
| Max LTV, purchase | 90% (as little as 10% down) |
| Max LTV, cash-out refinance | 80% |
| Max loan amount | $6 million |
| Minimum FICO | 640 |
| Availability | 39 states |
| Tax returns / W-2s / 1099s / bank statements | Not required |
| Loan structures | 30-year fixed, adjustable-rate, interest-only |
Who a P&L loan is for
P&L loans are built for self-employed borrowers and business owners whose tax returns do not reflect their real income. That is common, and it is not a flaw in the borrower — it is how the tax code works. Deductions reduce taxable income, and conventional underwriting reads taxable income as qualifying income. A profitable business with aggressive (and legal) tax strategy can therefore look too thin to a conventional lender while its cash flow easily supports the loan.
A P&L loan fits when:
- You are self-employed or own a business, and you have been for at least two years.
- Your business has existed for at least two years.
- Your profit and loss statement shows the income your tax returns hide.
- You are buying or refinancing an owner-occupied home or second home and want to qualify on business performance rather than deposits.
A P&L loan is not an investment-property program. If the property is an investment property and the rent covers the payment, a DSCR loan — which qualifies on the property’s cash flow, not yours — is the right tool instead.
How P&L qualification works
We rely on a profit and loss statement covering the last 12 or 24 months, backed by a letter from a CPA, EA, or CTEC, to establish qualifying income. The statement shows revenue and expenses, and therefore net income, for the business. Because it accounts for deductible business expenses properly, it gives a more accurate picture of what a self-employed borrower actually earns than a tax return alone.
What we need from you:
- A profit and loss statement for your business covering 12 or 24 months, with a letter from a CPA, EA, or CTEC.
- Proof you have been self-employed for at least two years, and that the business has existed for at least two years.
- Standard credit, property, and down-payment documentation for the loan itself — the P&L replaces the income documentation, not the rest of the file.
What we do not need: tax returns, W-2s, 1099s, or 12 months of bank statement deposits. That is the whole point of the program.
P&L vs. bank statement vs. DSCR — which one fits?
| Situation | Best fit |
|---|---|
| Self-employed, clean books, messy deposits (lump sums, seasonal swings, multiple business accounts) | P&L loan — the books tell a tidier story than raw deposits |
| Self-employed, strong deposits, books less tidy | Bank statement loan — qualifies on 12–24 months of deposits, up to 90% LTV, no tax returns |
| Investment property, rent supports the payment | DSCR loan — qualifies on the property’s cash flow, min 0.75 DSCR, up to 85% LTV on purchases, 14–21 day closes |
| Conventional income, clean tax returns | A conventional path may be cheaper — we will say so rather than sell you a Non-QM loan you do not need |
The honest framing is which tool fits the constraint, not which loan we want to sell. We underwrite all three, so there is no incentive to force your file into the wrong program.
P&L loan scenarios
The consultant whose returns hide the income. A self-employed consultant bills $400,000 a year and, after legitimate deductions, reports far less in taxable income. A conventional lender sees the return and declines the loan amount. The business’s P&L shows its actual net income, and the loan qualifies on that.
The contractor with seasonal deposits. A contractor’s bank statements swing wildly by season, and large lump deposits make a 12- or 24-month deposit average misleading. The P&L smooths that out: revenue and expenses over the period, backed by a CPA, EA, or CTEC letter, instead of a deposit average distorted by timing.
The business owner refinancing for cash-out. An owner-occupied cash-out refinance for a self-employed borrower can qualify on the P&L instead of deposits, up to 80% LTV — useful when the equity is in the primary residence and the tax returns do not support the amount.
P&L loan FAQs
What is a P&L loan?
A P&L loan is a Non-QM mortgage that qualifies a self-employed borrower using a profit and loss statement instead of tax returns. The lender uses the business’s documented net income to determine how much home the borrower can afford.
Do I need tax returns for a P&L loan?
No. At Defy, a P&L loan does not require tax returns, W-2s, 1099s, or bank statement deposits. The profit and loss statement, with a letter from a CPA, EA, or CTEC, is the income document.
How long must I be self-employed for a P&L loan?
At Defy, you must have been self-employed for at least two years, and your business must have existed for at least two years.
What credit score do I need for a P&L loan?
Defy’s minimum FICO for a P&L loan is 640. Higher credit scores support higher LTVs, up to 90% on purchases.
How much can I borrow with a P&L loan?
Up to $6 million at Defy, up to 90% LTV on purchases (as little as 10% down) and up to 80% LTV on cash-out refinances.
Where are P&L loans available?
Defy offers P&L loans in 39 states.
What loan structures are available?
30-year fixed-rate, adjustable-rate, and interest-only options.
P&L or bank statement — which is better?
It depends on which document tells the truer story. If your books are cleaner than your deposits, P&L usually wins. If your deposits are stronger than your books, a bank statement loan usually qualifies you for more. We offer both and will run your file against the one that fits.
Can I use a P&L loan for an investment property?
A P&L loan is for owner-occupied and second homes. For investment properties, a DSCR loan — which qualifies on rental cash flow rather than your income — is the right program.
Does Defy publish a P&L rate?
No. P&L pricing is scenario-based — it moves with credit score, LTV, and property type — and we do not publish a P&L rate floor.
Get a P&L loan quote
Ready to see where your file lands? Call (615) 622-1032 to talk through your P&L scenario with a Defy loan advisor.
