Bank statement loans. Where deposits count, not tax returns.
A bank statement loan qualifies a self-employed borrower using 12 or 24 months of bank deposits instead of tax returns. The lender averages the deposits and applies an expense factor to arrive at the income it will use. These loans are available on primary homes, second homes and investment property, for purchases and refinances.
This is for the business owner whose write-offs make a good year look like a thin one on paper. Send us 12 or 24 months of statements and we will run the deposit math the way a lender will, then shop the file across our lender network and show you what your income actually supports.
Who it's for
A fit if you're…
Self-employed, with write-offs that shrink your taxable income
A 1099 contractor whose deposits tell the real story
Commission-earning, with income that moves month to month
A business owner with strong revenue and a lean tax return
Turned down before because a tax return did not reflect the business
No personal tax returns, W-2s or pay stubs
Deposits do the work instead, on 12 or 24 months of statements.
A lower expense factor is possible
A letter from an accountant can bring the factor as low as 10% on select programs, which raises qualifying income.
Personal or business statements
Many programs accept either, and which one helps you more depends on how you move money.
Any occupancy
Primary home, second home or investment property, purchase or refinance.
Loan amounts to $4M
And higher on some programs. Single family, condos and 2-4 unit properties.
40+ lender network
Expense factors and statement rules differ by lender, so shopping the file matters here more than usual.
How the income calculation actually works
There are only two steps, and the second one is where most of the money is won or lost. First, the lender adds up the deposits across your statements and divides by the number of months, which gives an average monthly deposit. Second, it applies an expense factor: an assumption about how much of that money went to running the business rather than to you. The standard factor is 50%, so half the average deposit becomes the income the lender uses. If your business genuinely runs lean, a letter from an accountant confirming your actual expense ratio can bring the factor down, as low as 10% on select programs, and that single document can change what you qualify for more than anything else on the page.
Step one: total deposits divided by 12 or 24 months, giving an average monthly deposit
Step two: the expense factor reduces that average to qualifying income
Standard expense factor: 50%, so half the deposits count
With an accountant's letter: as low as 10% on select programs, so most of the deposits count
Transfers between your own accounts and one-off deposits are generally excluded, so keep business banking clean
Illustrative example only
Round numbers, chosen to show the math rather than to reflect any particular lender or file. Your figures, program and pricing will differ.
Illustrative bank statement income calculation at a 50% and a 10% expense factor
Step
Standard 50% factor
10% factor with accountant letter
Deposits over 24 months
$600,000
$600,000
Average monthly deposit
$25,000
$25,000
Expense factor applied
50%
10%
Monthly qualifying income
$12,500
$22,500
For illustration only. Not a commitment to lend, a rate lock or an offer of credit. Expense factors, statement requirements and qualifying income vary by lender and by file.
One pattern shows up again and again: the business is doing well, the accountant has done a good job reducing taxable income, and a full-documentation lender reads the result as a small income. A bank statement loan looks at the money moving through the account instead.
Business owners whose deductions and depreciation shrink taxable income
1099 contractors paid per project rather than on a salary
Commission earners whose monthly income swings
Owners with strong revenue and a deliberately lean tax return
Partners in a business who take distributions rather than a W-2 wage
This is a documented loan. It is documented differently, not lightly. There are no personal tax returns, W-2s or pay stubs, but the rest of a normal file still applies.
12 or 24 consecutive months of bank statements, all pages
Proof the business exists and that you own it, such as a licence or a state registration
A letter from an accountant if you want to pursue a lower expense factor
Credit, with a score from 620 available on select programs. No tradeline requirement when three credit scores are present
Funds to close and reserves, verified from statements
Property documents and insurance, as on any mortgage
Both are usually allowed, and the choice matters. Business statements show gross revenue, so the expense factor is applied to reduce it to income. Personal statements typically show money that has already had business costs taken out of it, so lenders often count a larger share of those deposits. If you pay yourself a consistent amount into a personal account, that route can be the stronger one. If most of the money stays in the business, business statements usually give the bigger average. Mixing personal and business spending in one account is what causes trouble, because it makes the deposits harder to read.
Business statements: gross deposits, with the expense factor applied
Personal statements: usually business-sourced deposits, often counted at a higher share
Owner-draw transfers between your own accounts are generally not counted twice
Keeping business and personal banking separate makes underwriting faster and cleaner
Which route qualifies you for more is worth testing before you pick a lender
Deposits are the most common answer, but they are not the only one. Our US lender network also qualifies borrowers from 1099 totals, from a profit and loss statement prepared by an accountant, or from a verification form completed by an employer. No income verification mortgages covers those three routes in detail, including what each one requires and the credit and leverage available. If the property is a US rental rather than a home you will live in, DSCR loans qualify the property on its rent instead.
A primary home, a second home or an investment property, on a purchase or a refinance. Loan amounts run up to $4M, and higher on some programs, on single family homes, condos and 2-4 unit properties. Financing is available to non-permanent residents on select programs. If the property is a rental and you would rather qualify on the rent it collects than on your deposits, look at DSCR loans instead, and at no-ratio DSCR loans if the rent does not fully cover the payment.
Pricing on a bank statement loan is typically higher than on a full documentation loan, because the lender is doing more work to verify income.
The expense factor is the single biggest variable. Ask what factor a lender will use before you compare rates, because a lower factor can matter more than a lower rate.
Mixed personal and business banking slows underwriting and can reduce the deposits a lender will count.
Large one-off deposits usually need to be explained, and may be excluded from the average.
Most programs expect an established self-employment history, commonly two years. Requirements vary by lender.
Statement requirements, expense factors, credit minimums and leverage vary by lender and by file, and nothing here is a commitment to lend.
FAQ
Questions buyers actually ask
How is my income calculated on a bank statement loan?+
The lender adds up the deposits on 12 or 24 months of statements and divides by the number of months to get an average monthly deposit. It then applies an expense factor, which is an assumption about how much of that money went to running the business. The standard factor is 50%, so half the average deposit is treated as qualifying income. A letter from an accountant can lower that factor on select programs.
12 or 24 months of statements, which is better?+
24 months usually smooths out a strong month or a slow season and gives a fairer average for a seasonal business. 12 months tends to help a business that has grown recently, because it leaves out the weaker earlier period. We look at both and use whichever the lender allows and whichever represents your income more accurately.
What is an expense factor?+
It is the share of your deposits the lender assumes went to business expenses rather than into your pocket. The standard factor is 50%, meaning half of the average deposit counts as income. With a letter from an accountant stating your actual expense ratio, the factor can go as low as 10% on select programs, which raises qualifying income substantially.
Can I use personal instead of business bank statements?+
Yes, on many programs. Personal statements are usually reviewed for deposits that come from the business, and lenders often count a higher share of them as income, since business costs have generally already been paid before the money reaches your personal account. Business statements typically carry the expense factor. Which route is better depends on how you move money.
What credit score do I need for a bank statement loan?+
Credit from 620 is available on select programs. A higher score generally means better pricing and higher available leverage. There is no credit pull to start a conversation with us; a credit check happens later, with your permission, when you formally apply.
Can I buy an investment property with a bank statement loan?+
Yes. These loans are available on primary homes, second homes and investment property, for purchases and refinances. If the property is a rental and you would rather qualify on the rent than on your deposits, a DSCR loan may be the better fit.
Do I need to be self-employed for two years?+
Most programs look for an established self-employment history, and two years is the common expectation. Some lenders will consider a shorter history with strong compensating factors such as more equity, higher reserves or a higher credit score. Requirements vary by lender.
Can a non-permanent resident qualify?+
Financing for non-permanent residents is available on select programs, with documentation of visa status. Terms and leverage vary by lender.
How does a bank statement loan work?+
You give the lender 12 or 24 months of bank statements instead of tax returns. The lender averages the deposits to get a monthly figure, then applies an expense factor to allow for business costs, and the result is the income it will use to qualify you. Everything else runs like a normal US mortgage: credit, funds to close, reserves, appraisal and closing.
What are bank statement loan rates?+
We do not publish a rate. Pricing is built from the file and moves with the market daily, and it is typically higher than on a full documentation loan because the lender is doing more work to verify income. Credit tier, leverage, occupancy, the property type and whether you use 12 or 24 months of statements all move it. We shop the file across our US lender network and show you the actual numbers side by side.
Is a bank statement loan a conventional loan?+
No. Conventional loans follow Fannie Mae and Freddie Mac guidelines, which require tax returns and a debt-to-income calculation. A bank statement loan is a non-QM loan made by lenders who set their own income rules, which is what allows deposits to stand in for returns. It is a US mortgage on a US property either way.
Can I use a CPA letter for a self-employed mortgage?+
Yes, on select programs, and it is often the single most valuable document in the file. A letter from your accountant stating your actual business expense ratio can lower the expense factor the lender applies, as low as 10% on some programs, which raises the income you qualify on. Not every lender accepts one, and the ones that do set their own rules for it.
How does a bank statement loan compare with a DSCR loan?+
A bank statement loan qualifies you on your own deposits, so it works for a home you live in as well as for investment property. A DSCR loan qualifies the property on the rent it collects and does not look at your personal income at all, but it is only for investment property. Self-employed investors often use both, one for the home and one for the rentals.
Let's run your deposits.
A 3-minute application. No credit pull to start. A rate estimate from a broker shopping 40+ lenders for you.
