Let’s imagine the situation: you are a self-employed person and just decided to become a homeowner. You’re applying for a loan, and your application all of a sudden is denied due to the lack of income or high debt-to-income ratio. It leaves you feeling trapped and frustrated. But why was the application denied? Because so-called traditional loan programs (Conventional, FHA) require the lender to use the taxable income from the business owners’ income tax returns. And the lender is limited to using only a fraction of the business owner’s real income. The good news is that our Profit and Loss statement program was designed to solve this common problem and became the easiest way for self-employed home buyers to get approved. How does it work at LBC Mortgage? We don’t require to show any income documents, like income taxes, W2 forms, or 1099. Rather than using all of the documents mentioned above, we allow the business owner to have their licensed tax preparer or accountant provide a 1 Year Profit and Loss Statement as income. Why so? Because it often provides a more accurate portrait of the applicant’s actual income profile. How to qualify? Here are a few requirements we would like to see:
  • You need to be self-employed for at least two years.
  • In order to get qualified, you will need to show profit and loss statements that are signed by your licensed tax preparer.
  • You will need to show a business license.
  • You can buy a house with a minimum down payment of only 15%.
Another option you can use is to show a self-prepared and signed profit and loss statement. However, you will also need to match it with the 2 monthly bank statements. What else do you need to know about this program? Many LBC Mortgage clients use this program to buy their dream home and decide to refinance it into a conventional loan once their tax advisers determine the optimal time. It allows the self-employed person to take control and buy a home on his or her terms. There are also no prepayment penalties for owner-occupied and second homes, so, once desired, the loan can be refinanced as soon as the applicant qualifies for a traditional home loan. The P&L statement program is similar to the Bank Statement Program, but the documentation requirements are much more convenient than providing 12 to 24 months of bank statements. Do you have any questions about the P&L program? Still not sure if you can qualify? Not a secret, several lenders offer this type of program too, but few of them can really match our experience and success rate, which makes us the trusted professionals you need to make this program work for you. Please feel comfortable letting us find the right mortgage program for you by giving us a call for a confidential discussion. We can analyze your mortgage scenario and let you know your options without pulling your credit. This is simply to have an initial discussion to see if this mortgage is a good fit for you and get an idea of your interest rate.