Overview
A profit & loss mortgage loan, also known as a self-employed mortgage or alternative documentation loan, is a type of mortgage designed for borrowers who are self-employed or have non-traditional sources of income and may not have the typical documentation (such as Tax Return forms) required for conventional loans. However, borrowers should be prepared to provide extensive documentation of their income and finances, and interest rates and terms may be less favorable compared to conventional loans.
Down Payment
P&L mortgage loans may require a down payment, although
the specific amount can vary depending on factors such as the borrower's credit
profile and the lender's requirements. The minimum down payment required is
10% - in the state of Florida we can go down to 3.5% down payment.
Income Verification
Lenders would analyze the borrower's profit and loss
statements to assess their income and financial stability. These statements
typically detail the revenue, expenses, and net profit or loss generated by the
borrower's business over a specified period, in most cases the past 12 to 24
months.
Credit Score
While credit requirements can vary among lenders, borrowers
typically need to have a good credit score to qualify for a P&L mortgage loan.
The minimum credit score required is 620.
Mortgage Insurance
P&L Loans do not have mortgage insurance regardless of
the amount of down payment.
Loan Limits
: Loan limits are set by the specific lender.
