AI summary
At a glance
- Period: YTD runs from January 1 through a stated cutoff date.
- Contents: Use a consistent basis for revenue, cost of goods sold, operating expenses, and net profit.
- Submission: Confirm the dates, preparer, signature, and any audit requirement before paying for the work.
Last year was quiet. This year, business is busy—but the mortgage conversation still revolves around last year’s tax return. A year-to-date profit and loss statement turns “things have changed” into numbers the lender can review.
The reverse can happen too: sales rise, but expenses rise faster. Bank deposits alone will not tell that story. Preparing a profit and loss statement for a mortgage application starts with matching what you earned, what you spent, and what remained over the same period.
📝 Key Takeaways
- Period: YTD runs from January 1 through a stated cutoff date.
- Contents: Use a consistent basis for revenue, cost of goods sold, operating expenses, and net profit.
- Submission: Confirm the dates, preparer, signature, and any audit requirement before paying for the work.
Year to date is not the same as the last 12 months
YTD means year to date. An August-end statement covers January 1 through August 31, not the twelve months from last September through this August.
A YTD profit and loss statement helps explain how the business has performed since the last annual tax return. Fannie Mae’s guidance discusses its role in assessing income stability and continuance. Start with the exact period requested for your application rather than assuming every loan needs the same report.
From $160,000 in revenue to $8,000 a month
Suppose January through August revenue is $160,000, cost of goods sold is $40,000, and operating expenses are $56,000. Subtract both expense categories and eight-month net profit is $64,000.
| Item | January–August total | Calculation |
|---|---|---|
| Revenue | $160,000 | Business revenue for the period |
| Cost of goods sold | $40,000 | Direct costs of providing products or services |
| Operating expenses | $56,000 | Rent, payroll, and other operating costs |
| Net profit | $64,000 | $160,000 − $40,000 − $56,000 |
| Average monthly net profit | $8,000 | $64,000 ÷ 8 months |
Illustrative amounts for January 1 through August 31.
The $8,000 is a simple average for those eight months. A business with heavy winter sales may not earn the same amount over the remaining four. Show monthly trends and seasonality alongside the average so the number has context.
What belongs on the statement?
Do not mix cash and accrual accounting
Be consistent about whether you record transactions when cash moves or when revenue and expenses are earned or incurred. Different methods can produce different figures, and mismatched methods create extra questions.
Three places where the numbers can go wrong
| Transaction | What to check |
|---|---|
| Business loan proceeds | Borrowed money has not been included as revenue. |
| Owner withdrawals | Draws have not automatically been classified as operating expenses. |
| Credit card purchases and bill payments | The same expense has not been recorded twice. |
If equipment purchases or a temporary office move increased costs, add a short explanation. Explaining the change is more useful than trying to make the numbers look smoother.
⚠️ CPA-prepared does not mean audited
Preparation, review, and audit are different services. If the request says “audited,” establish the required engagement with the CPA before work begins. Discovering that requirement afterward can cost more time and money.
Put last year and this year side by side
If average monthly profit has changed sharply, explain the reason in a sentence or two. Include evidence of new contracts, price increases, or higher input costs that connects to the change.
Name the file with its reporting period. If the books change, update the date on the submitted version too. Keeping old and new versions separate prevents unnecessary back-and-forth.
❓ Mortgage P&L FAQs
Q.Does a YTD P&L replace tax returns?
The documents cover different periods and serve different purposes. A tax return shows reported annual income; YTD shows the current year’s trend. Get the document list for the income method you are using.
Q.Can I prepare the statement myself?
Check the program’s allowed preparer and format. A borrower-prepared statement still needs to connect to the books and bank records. If CPA preparation or a separate review is required, arrange that scope of work.
A useful P&L connects revenue and expenses for the same period clearly. Once the current business picture is organized, compare monthly mortgage costs against the income it shows.
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