How It Works
Bank statement loans are a specific type of Non-QM mortgage that lets self-employed borrowers, freelancers, gig workers, and small business owners qualify based on deposits to their bank accounts rather than the adjusted income shown on tax returns. Lenders typically review 12 or 24 months of personal and/or business bank statements, then calculate qualifying income from the deposits using an expense ratio (commonly 50% for personal accounts and a custom ratio for business accounts).
This product exists because many self-employed borrowers legitimately reduce taxable income through allowable business deductions, mileage, depreciation, and retirement contributions. The result is a tax return that understates their true cash flow. A bank statement program looks at money actually moving through the account, giving an honest picture of what the borrower earns. Two-year self-employment history is standard, though some lenders accept one year with offsetting factors.
Bank statement loans are available for purchase, rate-and-term refinance, and cash-out refinance on primary residences, second homes, and investment properties. Loan amounts commonly reach $2–3 million with credit scores starting around 620. Expect interest rates roughly 0.5%–1.25% above comparable conventional pricing, balanced by the ability to qualify when traditional W-2 documentation cannot.
Who Is This For?
- Self-employed borrowers with 2+ years in business
- 1099 contractors, consultants, and gig workers
- Small business owners and freelancers
- Real estate agents, attorneys, doctors with practice income
- Borrowers whose tax returns understate their true cash flow
Pros & Cons
Frequently Asked Questions
How does bank statement income qualification work?+
Lenders review 12 or 24 months of your business and/or personal bank statements, calculate qualifying income from deposits using an expense ratio (typically 50% for personal accounts), then use that figure for DTI. Tax returns are not required.
Do I need to use my business or personal account?+
Both work. Most programs accept either or a combination of personal and business accounts. Business statements often qualify you for more income because the expense ratio is calculated specifically to your business type rather than the default 50%.
How long must I have been self-employed?+
Most bank statement programs require 2 years of self-employment in the same business. Some lenders accept 1 year with offsetting factors like strong reserves or large down payment. CPA or business license proves longevity.
What's the minimum credit score?+
Bank statement loans typically start at 620 credit score, with 700+ for best pricing. Reserve requirements (3–6 months PITI minimum) and 10–20% down are also standard.