Bank Statement Loans
Bank statement loans help self-employed borrowers qualify using 12-24 months of actual bank deposits instead of tax returns—ideal for business owners whose deductions make their taxable income appear lower than their actual cash flow.
Program Details
Key Benefits
- No tax returns needed
- Use actual income, not taxable income
- Programs for recent credit events
- High loan amounts available
- Investment property eligible
Program Tags
Who It's Best For
- Self-employed entrepreneurs and business owners
- 1099 contractors and gig economy workers
- Business owners who write off significant expenses
- Real estate investors with complex tax returns
- Borrowers whose tax returns don't reflect true income
Advantages
- No tax returns required—qualify on actual bank deposits
- Ideal for business owners with significant write-offs
- Loan amounts up to $3-5M available
- Primary, second home, and investment properties eligible
- Interest-only options available
- Foreign nationals may qualify
- Flexible income calculation for self-employed
- Recent credit events may be considered
Considerations
- •Higher interest rates than conventional (1-2% more)
- •Larger down payments typically required (10-25%)
- •More documentation (bank statements, business verification)
- •Expense factor reduces qualifying income for business accounts
- •Must be self-employed for 2+ years typically
- •May have prepayment penalties
Eligibility Requirements
- Self-employed for 2+ years (sometimes 1 year with strong profile)
- 12 or 24 months of personal or business bank statements
- U.S. citizens, permanent residents, and some foreign nationals
- Primary residence, second home, or investment property
- Business license or CPA letter may be required
Additional Requirements
- 12 or 24 months of consecutive bank statements
- Business must be operating for 2+ years (some flexibility)
- CPA letter, business license, or P&L may be required
- Personal statements: 100% of eligible deposits count
- Business statements: expense factor applied (typically 50%)
- Higher reserves typically required (3-6 months)
Pro Tips
- Personal bank statements are simpler—100% of deposits count vs. 50% for business accounts
- If using business statements, a CPA-prepared P&L can reduce or eliminate the expense factor
- Higher down payments (20-25%) significantly improve rates and approval odds
- Transfer large lump sums in advance—recent large deposits require documentation
- Consistent monthly deposits look better than sporadic large deposits
- Consider combining with interest-only payments for maximum cash flow
- Shop multiple lenders—bank statement programs vary significantly in guidelines and rates
Also Known As
Lenders average your deposits over 12 or 24 months. Personal bank statements typically count 100% of eligible deposits. Business bank statements apply an expense factor (usually 50%, meaning only half of deposits count). A CPA letter can sometimes reduce this factor.
Personal statements are usually better because 100% of deposits count. Business statements apply a 50% expense factor. However, if your business deposits are much higher than personal, business statements might still work better. We can analyze both scenarios.
Most programs require 2 years of self-employment. Some investors allow 1 year with compensating factors like higher down payment, excellent credit, or same industry experience. Very new businesses typically need to wait.
Regular business revenue deposits count. Transfers between your own accounts, loans, tax refunds, and one-time non-recurring deposits typically don't count. Large deposits may require explanation and documentation of their source.
The expense factor assumes business deposits aren't all profit—typically 50% is applied for expenses. You can reduce or eliminate this factor with a CPA-prepared profit and loss statement showing actual expenses, potentially qualifying with a higher income.
Yes, typically 1-2% higher than conventional rates. The rate depends on credit score, down payment, loan amount, and property type. Higher down payments (20-25%) and stronger credit (680+) significantly improve pricing.
Most programs require 620-660 minimum. Scores of 700+ get the best rates and lowest down payments. Some investors offer programs for scores down to 600 with larger down payments.
Yes! Bank statement loans work well for real estate investors. Investment properties typically require 20-25% down and have slightly higher rates. DSCR loans might be even better if rental income is strong.
Many do, especially for lower rates. Typical prepayment penalties are 2% in year 1, 1% in year 2, none after. You can often pay a slightly higher rate for no prepayment penalty—important if you plan to sell or refinance soon.
Yes! Some bank statement programs accept foreign nationals with ITIN or foreign passports. Requirements include higher down payments (25-30%), U.S. bank statements, and property may need to be in certain states.
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Typical Documents
- Last 30 days of pay stubs or income docs
- Last 2 years W-2s or 1099s (as applicable)
- Most recent 2 months of bank statements
- Government-issued ID
- Alternative income docs (e.g., bank statements)
Exact items vary by program and scenario.
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Information provided is for educational purposes only and is not a commitment to lend. All loans subject to underwriting approval. Rates and terms subject to change. Equal Housing Lender. Equal Housing Opportunity.