Bank statement loans: qualify on deposits, not tax returns.
When your tax return makes you look smaller than you are, we use 12 or 24 months of bank deposits to qualify you on the cash flow that actually exists. Personal or business — whichever tells the cleaner story.
Quick answer: what is a bank statement loan?
- Income source: 12 or 24 months of personal or business bank deposits.
- Tax returns required? No. We don't ask for or use them.
- Who it's for: self-employed borrowers whose tax return looks small because of legitimate write-offs, but whose deposits show real cash flow.
- Min FICO: typically 620–660, depending on LTV.
- Down payment: typically 10–20% for owner-occupied; higher for second home / investor.
- Loan amounts: up to $3M+ on most investor programs; super-jumbo case-by-case.
- Property: primary, second home, or investor (1–4 unit). Limited rural eligibility.
How underwriting calculates your income
This is the part traditional lenders cannot do — and it's why bank statement programs exist. There are two flavors, and your loan officer picks based on which set of statements tells the cleaner story:
Personal bank statements (12 or 24 months)
- Underwriter sums total qualifying deposits across the months.
- Excludes obvious non-business inflows: tax refunds, transfers from another personal account, gifts, loan proceeds, sale of asset.
- Divides by the number of months → average monthly qualifying income.
- Used directly as income on the application — no expense deduction.
Business bank statements (12 or 24 months)
- Underwriter sums business deposits, then applies an expense factor to back out the cost of doing business.
- Default expense factor often 50% (assumes business operating expenses are half of revenue).
- Lower expense factors (e.g. 20–30%) accepted with a CPA letter or business activity attestation documenting actual overhead.
- The lower the expense factor, the higher the qualifying income — which is why CPA letters matter.
If your business is light on expenses (consultant, online services, professional services), business statements with a CPA-attested low expense factor often produces the highest qualifying income. If you mostly receive personal direct deposits from your business, personal statements with no expense haircut may be better. We model both in the consult.
Worked example
Phoenix-based marketing consultant, S-Corp, sole owner. Tax return shows $48,000 net income because she paid herself a small W-2 salary and the rest reinvested. Real cash flow: ~$22,000/month into business checking.
| Method | Monthly qualifying income | Result |
|---|---|---|
| Conventional (Schedule C / 1040) | $4,000 | Declined — DTI too high |
| Business bank statements (24mo @ 50% expense factor) | $11,000 | Qualifies for ~$650K loan |
| Business bank statements (24mo @ 25% expense factor with CPA letter) | $16,500 | Qualifies for ~$900K loan |
Illustrative example only. Actual qualifying calculation depends on documentation and investor-specific guidelines.
What you'll need
- 12 or 24 most-recent months of statements from one account (consecutive, no gaps).
- Self-employment history of 2 years (some programs allow 1 year if you have prior W-2 in the same field).
- Business license or CPA letter verifying ownership percentage.
- For business statements: optional CPA expense letter to lower the expense factor.
- Standard mortgage docs: ID, credit, asset/reserve statements, purchase contract.
FAQ
How is a bank statement loan different from stated income?
It's not stated income. We document real deposits over 12 or 24 months. Stated-income loans were eliminated after the 2008 crisis. Bank statement loans are fully documented — just not from a tax return.
Can I use 12 months instead of 24?
Yes. 12-month programs are widely available; 24 months sometimes produces a slightly better rate or qualifying income because it shows more pattern. We pick by file.
Personal or business statements — which is better?
Depends on which account your real cash flow shows up in. If you take owner draws to a personal account, personal statements work. If revenue stays in the business checking, business statements with a CPA expense letter usually produces higher qualifying income.
My account has a few transfers in from my spouse. Will that count?
Transfers between spouses' accounts are typically excluded from qualifying deposits. Underwriter looks for income consistent with the source — business revenue, recurring third-party payments, or 1099 deposits.
Do I need a CPA?
Not strictly. A business license + ownership documentation is the minimum. A CPA letter is helpful for business statements when you want a lower expense factor (more qualifying income).
Can I do this with a 620 FICO?
Yes, on some programs. Lower FICO usually means higher down payment (often 20%+) and reserves of 6–12 months PITIA. Higher FICO opens up better pricing and lower down.
Ready to see if this is the right program?
Start the application or book a 20-minute call. We'll model real numbers, not estimates.