Navigating the mortgage landscape as a self-employed buyer can feel like trying to fit a square peg into a round hole. Traditional lending requirements—based heavily on W-2s and adjusted taxable income—often fail to represent the real earning power of entrepreneurs, freelancers, and business owners. At Miranda Mortgage in Denver, we understand the unique financial profiles of self-employed individuals and offer solutions that work for real life.
One such solution is the P&L Loan, or Profit and Loss loan. Tailored for borrowers whose tax returns don’t reflect their true income, this program makes homeownership possible—even when your financial path looks different from the norm.
A P&L Loan allows self-employed individuals to qualify for a mortgage using their business’s profit and loss statements instead of traditional income documentation. These loans are part of the broader category of non-QM (non-qualified mortgage) programs, which are designed for borrowers who fall outside the standard lending guidelines.
Rather than requiring tax returns, pay stubs, or W-2s, lenders evaluate your P&L statements—often prepared by a CPA—to determine your income. This is especially beneficial for those who reinvest in their business or maximize deductions, resulting in low taxable income but strong actual earnings.
This loan program is ideal for a wide range of self-employed borrowers, including:
Unlike some loan programs designed specifically for investment properties, P&L Loans can be used for primary residences and second homes. This flexibility makes them an excellent choice for self-employed buyers seeking to purchase or refinance a home they plan to live in.
The P&L Loan comes with several borrower-friendly features that make it accessible and competitive—especially in Denver’s dynamic housing market.
The standard down payment requirement is 15%. However, if a borrower has no credit score, a 25% down payment is required. This allows lenders to offset some of the additional risk associated with limited credit history.
Borrowers with credit scores of 600 or higher can qualify under standard terms. Even those without an established credit score aren’t disqualified; they just need to contribute a higher down payment.
P&L Loans permit debt-to-income (DTI) ratios up to 55%, which is higher than many traditional loans, including FHA loans. This expanded ratio allows borrowers to qualify for larger loan amounts and more expensive properties, even if their tax return income appears low.
There’s no prepayment penalty on a P&L Loan. That means borrowers can refinance into a more favorable rate as soon as they qualify—whether that’s three months or three years down the line.
Interest rates typically range from 8% to 12%, depending on credit score, down payment, and overall borrower profile. While this range is higher than conventional loan rates, the flexibility and accessibility of the program often make it worthwhile, especially for those planning to refinance.
While both are part of the non-QM loan family, P&L Loans and DSCR Loan (Debt Service Coverage Ratio) serve different purposes.
A P&L Loan is designed for owner-occupied properties. It’s best for buyers who plan to live in the home or use it as a second residence. Income is verified through business P&L statements, offering self-employed buyers a clear path to qualification.
A DSCR Loan is used strictly for investment properties and bases approval on the property’s income rather than the borrower’s personal income. It’s ideal for investors looking to grow their real estate portfolio but isn’t suitable for those buying a home to live in.
Understanding the distinction between these loan types can help ensure you’re using the right tool for your homeownership or investment goals.
One of the most powerful aspects of a P&L Loan is its flexibility. For many borrowers, it’s a temporary tool—one that gets them into a home now, even if their current financials are unconventional.
Once mortgage payments begin reporting to the credit bureaus and a credit score is established, borrowers often become eligible for refinancing. In many cases, refinancing into a conventional, FHA, or VA loan becomes an option just a few months after closing on a P&L Loan.
This strategy is especially helpful for:
Miranda Mortgage specializes in working with self-employed buyers across Colorado, and we’re proud to provide personalized support from day one.
Here’s what the P&L Loan application process looks like:
Our team works closely with underwriters who understand small business financials and are ready to approve borrowers based on what they truly earn—not just what they report on paper.
Self-employed individuals are often the backbone of Denver’s thriving economy—but they’ve been underserved by traditional mortgage guidelines for too long. At Miranda Mortgage, we’re changing that.
P&L Loans provide a way forward for business owners, freelancers, and independent contractors to buy or refinance a home, even when their tax documents don’t tell the whole story. Whether you’re just starting out or looking to upgrade your property, a P&L Loan could be your bridge to long-term homeownership.
Ready to explore your options?
Call 303.520.1786 or email Naiely@BarrettFinancial.com today to schedule a personalized mortgage consultation. Let’s turn your business success into homeownership success—together.
