P & L Statement
Property Types

A P & L Statement Mortgage Loan is designed primarily for self-employed borrowers or business owners who may not have traditional W-2 income but can demonstrate their ability to repay the loan through a profit and loss statement. Like other mortgage products, this type of loan can be used to purchase or refinance a variety of property types. However, the lender’s guidelines regarding the eligible property types may vary depending on factors like the loan size, the borrower’s financial profile, and the specific use of the property.

Here are the common property types that are typically eligible for a P & L Statement mortgage loan:

Primary Residence
A primary residence is the home where the borrower lives most of the time. This is the most common property type for any mortgage loan, including P & L Statement loans.

Eligible Properties
– Single-family homes
– Townhomes
– Condominiums (with some lender restrictions on condo associations)
– 2- 4 units

Lenders offer more favorable terms for primary residences, such as lower interest rates and lower down payment requirements. Since it’s the borrower’s main home, the risk to the lender is typically considered lower compared to investment properties or second homes.

Second Home (Vacation Home)
A second home is a property that the borrower uses as a vacation home or part-time residence, distinct from their primary home. P & L Statement loans can also be used to finance second homes, though lenders may impose stricter requirements than for primary residences.

Eligible Properties
– Single-family homes
– Townhomes
– Condominiums

Borrowers will likely need a higher credit score and a larger down payment (usually at least 15-20%) when purchasing a second home.
– Interest rates for second homes are typically higher than for primary residences.
– Lenders may require the second home to be located a certain distance from the borrower’s primary residence to qualify as a vacation property.

Investment Property
Investment properties are homes purchased with the intent to generate rental income or appreciation. These properties are not occupied by the borrower. P & L Statement loans are available for investment properties, but they come with additional risk for lenders, which can impact loan terms.

Eligible Properties
– Single-family rental homes
– Multi-family properties (e.g., duplexes, triplexes, and fourplexes)
– Condominiums (with lender restrictions)

Guidelines typically require higher down payments for investment properties, often 20-30% of the purchase price.
 Interest rates are usually higher for investment properties because they are considered riskier.
Some underwriters may require additional documentation, such as rent rolls or projected rental income, especially for multi-family units.

Multi-Unit Properties
Multi-unit properties, such as duplexes, triplexes, and fourplexes, can be purchased using a P & L Statement mortgage loan. These properties allow the borrower to live in one unit while renting out the others, or they can be fully rented out as investment properties.

– Duplex (2 units)
– Triplex (3 units)
– Fourplex (4 units)

Lenders may allow a borrower to use rental income from other units to help qualify for the mortgage, provided the rental income is documented properly.

– The maximum loan amount and down payment requirements may vary based on the property’s value and how many units are included.
– Lenders may impose stricter debt-to-income (DTI) and reserve requirements for multi-unit properties, especially if they’re not owner-occupied.

Condos and Townhomes
Condominiums and townhomes are also eligible for P & L Statement mortgage loans, though the approval process for these properties can be more complex compared to single-family homes.

Eligible Properties
– Condominiums (individual units within a shared building)
– Townhomes (typically part of a planned community)

Lenders may have additional requirements for condos, such as ensuring the condo association’s financials are in good standing or that the complex meets specific occupancy and ownership guidelines.

– Not all condos may qualify, particularly if the complex has too many investor-owned units or if it doesn’t meet lender guidelines.
– Interest rates may be slightly higher for condos due to shared maintenance obligations and association risks.

Non-Warrantable Condominiums
A non-warrantable condo is one that doesn’t meet the eligibility requirements for conventional financing from Fannie Mae or Freddie Mac, often due to issues with the condo association or the number of investor-owned units. Some lenders offering P & L Statement loans may still allow the purchase of non-warrantable condos.

– Interest rates for non-warrantable condos are typically higher, and lenders may require a larger down payment.
– Borrowers should carefully review the condo association’s finances and the bylaws before purchasing, as certain restrictions (like rental caps) may impact property value or resale potential.

Mixed-Use Properties
Mixed-use properties are those that combine residential living space with commercial or business space. These properties are eligible for P & L Statement loans, though the approval process can be more complex due to the dual-purpose nature of the property.

Eligible Properties
– Buildings with a combination of commercial (business) space and residential units.

Guidelines typically require that the residential portion of the property constitutes at least 50% of the total space for it to qualify for residential financing.

– The commercial aspect may lead to stricter down payment requirements, higher interest rates, or additional underwriting scrutiny.

Manufactured Homes
Manufactured homes are prefabricated homes that are built off-site and then transported to their permanent location. Some lenders offering P & L Statement loans allow the financing of manufactured homes, though there may be limitations.

Not all lenders finance manufactured homes, and those that do may have stricter property and borrower requirements.

– The home must be permanently affixed to a foundation and meet local building codes.

Properties Under Construction or Renovation
Some P & L Statement mortgage loans may be used for homes under construction or properties undergoing significant renovation.

– Lenders may require a detailed construction or renovation plan, as well as a budget.
– These loans may come with higher down payment requirements, and lenders may perform periodic inspections to ensure the work is progressing as planned.

A P & L Statement mortgage loan can be used to finance a variety of property types, including primary residences, second homes, investment properties, condos, and even multi-unit dwellings. However, each property type comes with its own set of eligibility criteria, down payment requirements, and risk considerations. Borrowers should carefully assess their financial goals and the specific property they intend to purchase, as well as work closely with a lender experienced in P & L based loans to ensure they meet all the necessary qualifications.