P&L Only Mortgages in Los Gatos, CA

What Is a P&L Only Mortgage?

A P&L Only Mortgage uses a Profit & Loss statement prepared by a licensed CPA, EA, or tax professional to verify self-employment income — instead of IRS tax returns. This program exists because tax returns often understate a business owner's actual income due to valid deductions (depreciation, vehicle expenses, business meals, Section 179 equipment write-offs). A borrower might show $90K in taxable income on their Schedule C while their business actually generates $220K in cash flow. The P&L statement shows gross revenue and actual net operating income — giving the lender a more accurate picture of borrowing capacity. CMRE accepts 12 or 24-month P&L statements. The 24-month option shows stability; the 12-month option may reflect higher recent income.

How P&L Income Is Calculated — Worked Example

CMRE qualifying income = net profit from the CPA-prepared P&L statement ÷ number of months. Example: Maria owns a marketing agency. Her Schedule C shows $95K taxable income after write-offs. Conventional lenders decline — not enough income for the $580K purchase she wants. Her CPA prepares a 12-month P&L: Gross revenue $340K, operating expenses $120K, net profit $220K. CMRE qualifying income = $220K ÷ 12 = $18,333/month. At a 43% DTI, Maria qualifies for a monthly payment up to $7,883 — which supports a $580K loan at 7.5%. A CPA letter is required alongside the P&L, confirming the business is active and the statement is accurate.

P&L vs. Bank Statement Mortgage — Which Is Better?

• •P&L Only: Income = net profit from CPA P&L. Best when actual profit is strong and clearly documented.
• •Bank Statement: Income = gross deposits × expense factor (50%–100%). Best when deposits are high and consistent.
• •Documentation complexity: P&L = 1 document (CPA letter + P&L). Bank statement = 12–24 months of statements averaging process.
• •Qualifying income: P&L often produces higher qualifying income when net profit is strong. Bank statement may produce higher income when deposits are high but expenses are real.
• •FICO minimums: P&L = 680. Bank statement = 660.
• •Best choice: CMRE runs both scenarios and presents the option that produces the highest qualifying income and lowest rate for each borrower.

Who Qualifies for a P&L Only Mortgage?

• •Self-employed borrowers (2+ years in same field) with strong net profit but high write-offs on tax returns.
• •Small business owners: LLCs, S-Corps, sole proprietors — all eligible.
• •Freelancers, consultants, and independent contractors with consistent project income.
• •Real estate investors who own businesses alongside their property portfolio.
• •Borrowers who previously qualified conventionally but recently took on aggressive write-offs.
• •Foreign nationals are not eligible for P&L — see CMRE bank statement or DSCR programs.

CPA Letter Requirements — What CMRE Needs

• •The CPA or EA must hold an active license (PTIN or state CPA license number required).
• •Letter must confirm: (1) business is active for 2+ years, (2) borrower is the owner/principal, (3) P&L accurately reflects business operations.
• •P&L must cover the declared period (12 or 24 months).
• •Prepared on CPA letterhead with signature, date, and license number.
• •CMRE does not re-audit the P&L — the CPA attestation is accepted as professional certification.
• •Typical turnaround: 2–5 days from your CPA once the loan scenario is approved.

How to Apply for a P&L Only Mortgage with CMRE

• •Step 1: Tell CMRE your situation — employment type, business type, income level, target purchase price.
• •Step 2: CMRE runs a P&L vs. bank statement scenario comparison to identify your best qualification path.
• •Step 3: CPA prepares P&L statement and cover letter — 2–5 business days typical.
• •Step 4: CMRE pre-approval issued within 24–48 hours of complete package receipt.
• •Step 5: Property appraisal and processing. Close in 21–35 days.