This is another alternative income qualification mortgage product designed for Self-Employed borrowers and applicants outside of traditional Conventional, FHA or VA loans.

In lieu of providing IRS tax returns and pay stubs, applicants can submit a CPA completed Profit and Loss Statement to determine qualifying income.

The CPA that completes this must also be the same CPA that completed the most recent years IRS tax return filing. Approval is based on bottom line net income for the year and will calculate that to a monthly income amount which will be utilized as the Eligible Monthly Income for loan approval.

                            For examples,

• 12-Month CPA or EA compiled P & L Statement 
  • Minimum 50% business ownership is required by the applicant and/or borrower  
  • 12-month P & L prepared/compiled and signed by a CPA or EA dated within 30-days of the loan application, representing total business sales and expenses for the time period covered, and…
  • The preparer must attest they have prepared the borrower’s most recent tax returns and provide the borrower’s ownership percentage.
  • Expenses on the P & L must be reasonable for the industry of work.

Example on How to Calculate Income:

Qualifying income is the net income from the P & L divided by the time period covered (12-months) multiplied by the borrower’s ownership percentage equals Eligible Monthly Income.

• Net Income: $300,000 / 12 Months = $25,000