P&L-only loan vs. Bank statement loan
Both skip tax returns, but they document income differently. A P&L-only loan uses a CPA-prepared profit-and-loss statement as the income proof. A bank statement loan totals your deposits and applies an expense factor. The better choice is simply whichever presents your income more favorably.
Clean books with strong documented margins favor P&L-only; high deposits with an unfavorable default expense factor favor — or are rescued by — a CPA letter on either path.
Side by side
| Factor | P&L-only loan | Bank statement loan |
|---|---|---|
| Income document | CPA-certified P&L statement | 12–24 months of bank statements |
| CPA required | Yes — must prepare and sign | Optional (a CPA letter can lower the factor) |
| Reflects margins | Directly, as stated on the P&L | Indirectly, via the expense factor |
| Down payment | 10–20% typical | 10–20% typical |
| Minimum credit | 620–680+ | 620–660+ |
| Best when | Books are clean and margins are strong | Deposits are high and consistent |
Figures are representative ranges, not quotes, and vary by lender. Read the full guides: P&L-only loan · Bank statement loan.
Who should pick p&l-only loan
Self-employed borrowers with clean, CPA-maintained books whose true margins are higher than a lender's default expense factor would assume.
Who should pick bank statement loan
Borrowers with strong, consistent deposits who'd rather document money received than commission a formal CPA profit-and-loss statement.
Bottom line
Still deciding? Take the 5-question loan quiz, compare every option on the loan types page, or size a purchase with the affordability calculator.
FAQ
Yes — the profit-and-loss statement must be prepared and signed by a licensed CPA to be accepted. On a bank statement loan a CPA is optional, though a CPA expense letter can lower your expense factor and raise qualifying income.
It depends on your business. If your documented margins are better than the lender's default expense factor (often 50%), a P&L can show more. If your deposits are very high, the bank statement method may. Ask a lender to run both.
Educational information only — not financial advice, and not a quote, pre-approval, or offer of credit. Mortgage Merlin is a publisher, not a lender or broker.