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Derek Bissen, February 27 2024

Self-Employed and Looking to Buy a Home? Bank Statement vs P&L for Mortgage Loans - What You Need to Know!

If you're steering your own ship in the sea of self-employment and setting your sights on homeownership, you might find the traditional mortgage process doesn't quite fit your sails. While banks and credit unions traditionally turn to tax returns to gauge your borrowing capability, this method may not always showcase the full strength of your financial standing. Fortunately, the lending world has evolved, offering mortgage loan solutions that cater specifically to the self-employed applicant.

Mortgage Solutions for Self-Employed Business Owners

Enter the realm of Bank Statement Loans and the slightly newer kid on the block, the Profit and Loss (P&L) Statement Loan. Both options are crafted with the unique income scenarios of business owners in mind, yet they cater to different business types through distinct qualification processes. This article aims to unravel these options, guiding you to the choice that aligns with your business model.

Before we dive deep, a quick reminder: if this insight lights a bulb for you, don’t forget to like, share, and subscribe for more content like this.

Inside This Guide:

Common Ground

Distinguishing Features: 

Income Qualification

Unlike the tax return-based income calculation of traditional home loans, these programs offer alternative methods for the lender to calculate your income:


Income Assessment: Lenders review 12 months of your business bank statements, focusing on regular business income deposits. They exclude non-business deposits to calculate a gross annual income.

Expense Evaluation:  Applicants complete a simple Business Narrative Form helps lenders apply a pre-determined expense ratio to your gross income, usually ranging from 15% to 80%, to estimate your net income.

Expense Ratio Adjustment: Optionally, a CPA or other licensed tax preparer can certify if your actual expense ratio is lower, potentially improving your income qualification.


This streamlined approach involves a licensed tax preparer creating a Profit and Loss Statement for the last 12 months, detailing your gross income and expenses. Lenders use the net income for loan qualification, offering a clear picture of your business’s profitability, independent of tax return data.

Choosing Your Path

The right loan for you hinges on how your business operates and financial preparation:

Bank Statement Loans suit businesses that have regular, traceable bank deposits and a stable or growing income.  Bank Statement loans have a minimum down payment equal to 10% of the purchase price. 

P&L Statement Loans accommodate a wider range of businesses, including those with seasonal income or few large deposits, with a 20% down payment minimum.

Essential Qualifications

Both programs necessitate:

Bank statements (12 months for income verification, 3 months for down payment resources)

For the P&L Program, a recent Profit & Loss Statement from a CPA or other licensed tax professional.

Ready to Take the Next Step?

Our website offers a free, program-specific document checklist to streamline your application. Visit, navigate to Loan Programs, select your preferred option, and download your checklist today.

By focusing on your unique journey as a self-employed individual, we aim to make the path to homeownership not just a dream, but a reality. Whether it's the Bank Statement or P&L Statement Loan that best suits your needs, we're here to help you discover your success in homeownership.

You can also drop us a line HERE »

Yours in successful homeownership,

Derek Bissen
Loan Originator
Unconventional Lending Program Director

Derek Bissen is a licensed Mortgage Loan Originator with over 25 years of experience in the industry. Derek is a self-employed lending expert who is known for his ability to work with borrowers who have substantial wealth and non-traditional lending needs. He is a creative loan structurer and specializes in portfolio lending, asset-based lending, bank statement lending, as well as traditional loans such as Conventional, FHA, VA, and first-time homebuyers. Derek's expertise in the mortgage industry is unparalleled. He is a trusted advisor to his clients, providing them with customized loan solutions that meet their unique financial goals and needs. His vast experience and knowledge make him a valuable asset to anyone looking to purchase a home or refinance their existing mortgage. As a highly-experienced loan originator and author, Derek is committed to sharing his knowledge with others. He regularly provides valuable insights and advice to readers looking to navigate the complex world of mortgage lending. His articles are informative, engaging, and backed by years of hands-on experience. With his wealth of knowledge and dedication to his clients, he is the go-to source for all your mortgage lending needs. If you're looking for a reliable and trustworthy mortgage expert, contact Derek today to learn more about how he can help you achieve your financial goals.

Written by

Derek Bissen

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