Bank Statement Loans
Certain bank statement programs may allow qualifying income to be calculated from bank deposits instead of traditional tax-return income, subject to lender guidelines. Designed for self-employed borrowers and business owners.
Program Overview
Bank statement loans are a type of non-QM mortgage that uses 12 to 24 months of personal or business bank statements to verify income instead of traditional tax returns or W-2s. This makes them ideal for self-employed borrowers, freelancers, gig workers, and business owners who write off significant expenses and show lower taxable income on their returns than their actual earnings. Bank statement programs give self-employed borrowers a path to competitive mortgage financing without being penalized for smart tax strategies.
Who Is This Loan For?
- ✓ Self-employed borrowers with 2+ years of business history
- ✓ Business owners whose tax returns understate actual income
- ✓ Freelancers and independent contractors (1099 earners)
- ✓ Gig economy workers and consultants
- ✓ Professionals who maximize write-offs and deductions
Key Benefits
Alternative Income Documentation
Income may be calculated from bank statement deposits instead of traditional tax-return income, subject to lender guidelines.
Personal or Business Statements
Use personal bank statements, business bank statements, or a combination depending on the program.
Flexible Income Calculation
Lenders apply an expense factor (typically 50% for business statements) to determine qualifying income from deposits.
All Property Types
Available for primary residence, second home, and investment property — unlike DSCR loans which are investment-only.
Qualification at a Glance
General Requirements
- 12 or 24 months of consecutive bank statements
- Minimum credit score of 620–680 depending on lender
- Down payment of 10–20% depending on LTV and credit
- Self-employed for at least 2 years (verified by business license, CPA letter, or tax transcript)
- DTI generally up to 50%
- Reserves of 3–12 months PITIA may be required
Advantages
- ✓ May use bank statements instead of traditional tax-return income, subject to lender guidelines
- ✓ Income based on actual bank deposits
- ✓ Available for primary, second home, and investment
- ✓ Competitive rates for non-QM category
- ✓ Gift funds often permitted for down payment
- ✓ Cash-out refinance available
- ✓ Can close in personal name or entity (varies)
Tradeoffs to Consider
- ↔ Higher rates than conventional and government loans (typically 0.5–1.5% higher)
- ↔ Requires 2+ years of self-employment history
- ↔ Expense factor reduces qualifying income (especially on business statements)
- ↔ Larger down payment than FHA or VA (10–20%)
- ↔ Some lenders require CPA letter or P&L statement
- ↔ Not available through Fannie Mae / Freddie Mac
Common Scenarios
Restaurant Owner with High Revenue
A restaurant owner grosses $500K/year but shows $60K on tax returns after deductions. Using 12 months of business bank statements with a 50% expense factor, qualifying income is calculated at $250K — enough to purchase a $750K home.
Freelance Consultant Buying First Home
A marketing consultant earning $12K/month through contract work uses 24 months of personal bank statements showing consistent deposits. No W-2 needed.
Business Owner Refinancing
A contractor wants to refinance their primary home to lower their rate. Tax returns show minimal income, but 12 months of business bank statements demonstrate strong cash flow. Bank statement program allows the refinance with no issue.
Documents Typically Needed
- 12 or 24 months of consecutive bank statements (personal or business)
- Business license or proof of self-employment (2+ years)
- CPA letter or signed P&L statement (some lenders)
- Two months of asset statements (for reserves)
- Government-issued photo ID
- Insurance quote and property tax information
Frequently Asked Questions
Lenders total your deposits over 12 or 24 months and divide by the number of months to get an average monthly income. For business bank statements, an expense factor (typically 50%) is applied. For personal bank statements, deposits are usually counted at a higher percentage.
Broker Disclosure: Scout Financial Group Inc DBA Airus Lending is a licensed mortgage broker (NMLS #2187418) and does not make loans or credit decisions. Airus Lending works with multiple wholesale lenders to help borrowers compare available loan options. Final approval depends on the lender, automated underwriting findings, documentation, state requirements, and overall borrower profile. Not all applicants will qualify.