Bank Statement Loan Explained
A Bank Statement Loan is a mortgage designed for self‑employed borrowers who don’t qualify using traditional tax returns. Instead of W‑2s or pay stubs, lenders use 12–24 months of bank statements to calculate income.
How Bank Statement Loans Work
Lenders review your business or personal bank statements to determine your average monthly deposits. This becomes your qualifying income. No tax returns are required.
Who Bank Statement Loans Are For
- Self‑employed borrowers
- Business owners
- Independent contractors
- Gig‑economy workers
- Borrowers with large write‑offs
- Anyone whose tax returns don’t reflect real income
What Lenders Look At
- 12–24 months of bank statements
- Consistent deposits
- Business stability
- Credit score
- Down payment
- Cash reserves
Income Calculation Methods
- Personal bank statements: 100% of eligible deposits
- Business bank statements: 40%–60% of deposits (varies by lender)
- CPA letter may be required for business expense ratios
Basic Requirements
- 620+ credit score
- 10%–20% down payment
- 12–24 months of statements
- Clean, readable deposit history
- Proof of business ownership (if applicable)
Property Types Allowed
- Primary homes
- Second homes
- Investment properties
- Single‑family homes
- Condos and townhomes
- 2–4 unit properties
Benefits
- No tax returns
- No W‑2s or pay stubs
- Higher approval rates for self‑employed borrowers
- Flexible income calculations
- Great for borrowers with write‑offs
- Fast approvals
Next Steps
If you’re self‑employed and traditional income documents don’t reflect your true earnings, a Bank Statement Loan may be the best option. Review your statements, calculate your average deposits, and compare lender programs before applying.
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