Loan Guides • Bank Statement

Bank Statement Loan Guide

Bank statement loans are designed for self-employed borrowers and business owners whose tax returns don’t show the full story. This guide explains how they work: how income is calculated, what lenders look for, and when a bank statement loan might be the right tool.

For self-employed borrowers, business owners & independent contractors Uses bank deposits instead of traditional tax-return income Typically part of the non-QM / specialty loan space

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Bank statement at a glance

~6 min read

Bank statement loans at a glance

Bank statement loans use a careful review of your deposits instead of relying only on tax returns. They’re built for people whose income is real, but doesn’t fit neatly into traditional boxes.

① Qualifying income is based on 12–24 months of bank statement deposits, not just net income on tax returns.
② Common for self-employed, 1099 earners, and business owners with significant write-offs.
③ Usually requires larger reserves and down payment than standard Conventional loans, with pricing that reflects the extra flexibility.

Built for real-world self-employed income. Plain-English • Numbers-focused

Coaching insight

Who a bank statement loan is usually a good fit for

Bank statement loans are meant for people who run their own show. You may have strong cash flow, but your tax returns show a lower net income because of write-offs, business expenses, or how your CPA structures things.

They may be a strong fit if you:

Are self-employed, a business owner, or a 1099 contractor with at least 1–2 years of history.
Have steady or growing deposits into your business or personal accounts.
Take legitimate write-offs that make your taxable income look lower than your true cash flow.
Can bring a meaningful down payment and keep some reserves in the bank.
Understand that specialty lending usually has higher costs than standard Conventional or FHA loans.

If your tax returns already support the home you want, a Conventional or FHA loan may give you better long-term terms. A bank statement structure is usually Plan A when the numbers don’t work on paper any other way.

How it works

How lenders use your bank statements to calculate income

Step 1: Gather the right statements

Lenders typically review 12–24 months of consecutive bank statements.
These can be business statements, personal statements, or a combination, depending on the program.

Step 2: Add up eligible deposits

We focus on business-related deposits and exclude transfers between accounts or one-time items.
For business accounts, lenders may apply an expense factor or use a CPA letter to estimate true net income.

Step 3: Average and apply guidelines

The bank statement income is usually an average monthly figure based on those deposits and expense assumptions.
That income feeds into normal underwriting: DTI, reserves, credit profile, and property type.

The exact math can vary from investor to investor. The key is that your real deposits drive the story, not just your taxable net income.

Approval basics

Credit, debt-to-income & reserves: what really matters

Credit profile

Because bank statement loans are specialty products, stronger credit typically helps. Lenders may have minimum score requirements and will look closely at your overall history, including housing, major trade lines, and recent behavior.

DTI & reserves

Debt-to-income still matters, but so do cash reserves. Non-QM investors usually want to see several months of payments in the bank after closing—sometimes more—plus a clear path for handling your business obligations and personal expenses.

You don’t need to manage every detail yourself. Our job is to translate your real business into lender language and show you how to position your file for the strongest terms available.

Property & occupancy

What kinds of homes work with bank statement loans?

Depending on the specific program and investor, bank statement loans can be used for:

Primary residences (often the most common use).
Second homes, such as vacation or part-time-use properties.
Investment properties in some cases, especially when combined with other Non-QM features.
Typical property types like single-family homes, townhomes, condos and some 2–4 unit properties, subject to guidelines.

Property type, occupancy, and loan size all affect minimum down payment, reserves, and pricing. We’ll map out what’s realistic for your specific home and your business.

Compare options

Pros & trade-offs vs. Conventional, FHA and other Non-QM

Where bank statement loans can shine

Bank statement loans can be powerful when traditional options don’t work:

Your tax returns show low net income due to write-offs, but deposits tell a different story.
You want to avoid amending returns or waiting years for tax strategies to change.
You need flexibility today to capture a specific opportunity or move your family forward.

Important trade-offs to understand

In exchange for that flexibility, bank statement loans often:

Carry higher interest rates and costs than standard agency loans.
Require larger down payments and reserves.
May have more limited options for things like cash-out or future refinancing.

A good plan usually compares bank statement vs. Conventional/FHA vs. other Non-QM side-by-side, so you can see not just “Can I get approved?” but “What does it really cost and what am I getting?”

Real-world example

Self-employed buyer using 12 months of business statements

Example scenario (for education only)

Imagine a business owner who has been self-employed for several years. Revenue is strong, deposits are steady, but tax returns show modest net income because of equipment, mileage, and other write-offs.

In a case like this, we might compare:

Conventional using tax-return income (which may limit the purchase price).
Bank statement loan using 12–24 months of business deposits, with an expense factor applied.
A longer-term plan where tax strategy and loan strategy are coordinated for future purchases.

Sometimes the bank statement option is the bridge that lets you move forward now, with a plan to revisit Conventional pricing later if and when it makes sense. The key is knowing those trade-offs up front.

Next steps

What to have ready when we explore bank statement options

To move quickly, it helps to gather:

12–24 months of bank statements (business and/or personal, depending on how you operate).
Basic business details – type of entity, years in business, and what you do.
Recent tax returns – even if we’re not qualifying off them, they help round out the picture.
Any existing mortgages or leases – on personal and business properties.
Comfortable payment range – what works in real life, not just on paper.

From there, we can build a side-by-side view: what your numbers look like with a traditional approach versus a bank statement structure, and how each one affects your cash, payment, and timeline.

Smart questions

Questions to ask about any bank statement loan quote

As you compare options, these questions keep the conversation grounded:

How exactly is my income being calculated from my deposits?
What down payment and reserves are required for my property type and occupancy?
How does this option compare to Conventional or FHA for my scenario?
What are the total costs over the next 5–7 years? (Not just the upfront costs.)
What’s the realistic path to refinance or move into an agency loan later, if that makes sense?

Clear answers to those questions help you decide whether a bank statement loan is a strategic tool or a last resort— and how it fits into your bigger financial story.

Ready to see what a bank statement loan looks like for you?
We’ll take a careful look at your deposits, your business, and your comfort zone—and show you how bank statement options compare to everything else on the table.

Start a bank statement review → Schedule a 30-minute call