1099 and P&L Loans
A 1099 loan and a profit and loss statement loan are non-QM mortgages for self-employed borrowers. One documents income with the 1099 forms your clients send you. The other uses a profit and loss statement prepared by a qualified tax professional. Neither one relies on your tax returns.
Justin Lazzaro, NMLS #1229453 | Reasy Financial, LLC, NMLS #2446155 | Licensed in Arizona, Pennsylvania, Florida, and Texas
Who these loans fit
They are built for people whose income is steady but whose tax returns do not show it after write-offs.
Independent contractors and commission earners
If most of your income arrives on 1099 forms from one or a few companies, the 1099 route is usually the simplest file.
Business owners with a tax professional
If a CPA or enrolled agent already keeps your books, a prepared profit and loss statement can document your income.
Who it usually does not fit
W-2 employees, and self-employed borrowers whose tax returns already qualify. A conventional loan will usually cost less.
How qualifying works
1
We pick the documentation that fits
1099 forms, a prepared profit and loss statement, or bank statements. The right choice depends on how you are paid and what your records look like.
2
The lender calculates income
On a 1099 loan, an expense factor is usually taken off your gross 1099 income. On a P&L loan, the lender uses the net income on the statement and your share of the business.
3
The income is cross-checked
Expect to show year-to-date earnings on a 1099 loan. Many lenders ask for a few months of bank statements to support a P&L.
The profit and loss statement has to be prepared by a qualified third party the lender accepts, such as a CPA or enrolled agent. A statement you prepare yourself is not accepted. Most lenders want to see two years of self-employment.
How it compares to other options
All of these document self-employed income. The difference is the paperwork and the terms.
| Option | How income is documented | Worth knowing |
|---|---|---|
| 1099 loan | 1099 forms plus proof of year-to-date earnings | Terms are usually similar to a bank statement loan |
| P&L loan | A profit and loss statement prepared by a qualified tax professional | Terms are often tighter, and some programs do not offer it |
| Bank statement loan | Twelve or twenty-four months of bank deposits | The most widely available of the three |
| Conventional loan | Tax returns and standard income documents | Usually the lowest cost when your returns qualify |
Three things to know before you apply
1
Lenders calculate income differently
The expense factor on 1099 income and the rules for a P&L vary by lender. The same records can produce different qualifying income, so I compare methods first.
2
A P&L loan has more limits
Many lenders cap the loan-to-value lower on a P&L file, want stronger credit, or restrict it to a primary home.
3
It usually costs more
Non-QM loans generally carry higher rates and costs than conventional loans. If your tax returns qualify, that is usually the better value, and I will tell you so.
Guidelines change. I confirm current requirements with the lender before quoting anything.
Common questions about 1099 and P&L loans
Short answers to common questions. Program rules vary by lender, so treat these as general guidance, not a loan decision.
How many years of 1099s do I need?
It depends on the lender. Some use the most recent year and some use two, and all of them want proof that the income is continuing this year.
Who can prepare the profit and loss statement?
A third-party tax professional the lender accepts, such as a CPA, an enrolled agent, or another qualified tax preparer. A statement prepared by the borrower is not accepted.
Will I still need bank statements?
Often, yes. Many lenders ask for a few months of statements to confirm that your deposits support the income on the 1099s or the P&L.
How long do I need to be self-employed?
Two years is the usual standard. A few lenders consider a shorter history, for example when you moved from a W-2 job to contract work in the same field.
Can I use one of these loans for a rental property?
1099 loans are often available for second homes and rentals. P&L loans are more limited, and for a rental a DSCR loan may be the better fit.
Where do you offer 1099 and P&L loans?
I am licensed in Arizona, Pennsylvania, Florida, and Texas, and I compare these programs across multiple wholesale lenders.
Ready to talk it through?
Pick a time that works for you. We'll go over your goals and next steps, no pressure, just a conversation. Prefer to call or text instead? Reach me directly at (412) 638-4982, or book a quick Zoom if that's easier.
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Licensing
Justin Lazzaro, NMLS #1229453
Reasy Financial, LLC, Company NMLS #2446155
AZ Mortgage Banker License BK #2012302
FL Mortgage Lender License MBR6883
PA Mortgage Lender License 107748
TX Mortgage Company License 2446155
Licensed in Arizona (LO-2001846), Florida (LO71883), Pennsylvania (73668), and Texas
Contact
14100 N 83rd Ave, Suite B-230
Peoria, AZ 85381
