A bank statement loan qualifies you on the deposits flowing through your bank accounts instead of the income shown on your tax returns. It is built for business owners, contractors and other self-employed borrowers whose write-offs make their taxable income look smaller than what they actually earn.
How income is calculated
- The lender reviews 12 or 24 months of personal or business bank statements.
- For business accounts, an expense factor, often 50%, or a CPA-prepared expense letter, is applied to estimate net income. Personal accounts are usually counted at 100% of qualifying deposits.
- Large, irregular or transferred-in deposits may be excluded or require explanation.
Typical requirements
- Two years of self-employment, verified by a business license, CPA letter or similar.
- Down payment of 10% to 20% or more, depending on credit and loan size.
- Credit score minimums vary by lender; stronger credit means a lower rate and a smaller down payment.
- Reserves of several months of payments after closing.
What to expect
- These are non-QM loans, so the rate is usually higher than a conventional loan with full tax returns. We always price both when both are possible.
- Available for purchases and refinances, primary residences, second homes and investment properties, including jumbo amounts.
- Some programs carry a prepayment penalty. It will be shown on your Loan Estimate.
- Your income is still verified, as federal rules require; the statements are the documentation.
Related programs
1099-only and profit-and-loss loans work the same way with different documents. See mortgages for the self-employed for the full list, or DSCR loans if the property is a rental.