Profit & Loss Statement

What is a Profit & Loss Statement?

A Profit & Loss Statement — commonly called a P&L or Income Statement — summarizes a business’s financial activity over a defined period (typically a month, quarter, or year). It lists revenue at the top, subtracts cost of goods sold and operating expenses, and arrives at net income or net loss at the bottom. It is one of the three core financial statements every business produces, alongside the Balance Sheet and the Cash Flow Statement.

For a self-employed mortgage borrower, the P&L is the closest analog to a W-2 employee’s pay stubs. It demonstrates how much the business actually earns — which often differs significantly from what shows up on a personal 1040, since business owners deduct legitimate expenses that depress taxable income while leaving real cash flow intact.

In a P&L Only mortgage program, the lender accepts a professionally-prepared P&L as the sole income documentation — no personal tax returns, no W-2s, no bank statements required for income calculation. This is the cleanest non-QM path for borrowers whose business books are well-organized and whose tax returns understate their cash flow.

How a P&L works at Total Quality Lending

Total Quality Lending’s P&L Only mortgage (part of the Prime Time non-QM program) accepts a 12-month or 24-month P&L prepared by a CPA, EA, CTEC, or Tax Attorney as the sole income documentation. The preparer must attest they also completed or filed the borrower’s most recent business tax return.

The qualifying monthly income from the P&L flows into a standard DTI calculation. On the Prime Time P&L Only matrix, max LTV reaches 80% on primary residence at 720 FICO and ≤$2M loan, with stepdowns at higher loan tiers and lower credit scores. The program requires 1x30x12 housing history maximum and at least 36 months of credit-event seasoning.