Bank Statement Loan
A Bank Statement Loan is a great solution for Self-Employed individuals who may not have traditional income documentation.
A Bank Statement Loan provides a way for the self-employed to qualify for a mortgage without providing tax returns to document income.
What is a Bank Statement loan?
Self-employed borrowers often find traditional mortgage qualification processes frustrating, as their reported taxable income may not reflect real cash flow. Bank statement mortgage loans addresses this by focusing on deposits shown in your bank records rather than on IRS forms.
Lenders typically request 12 to 24 months of personal or business bank statements to calculate an average monthly income. They then assess your debt-to-income (DTI) ratio, credit score, and cash reserves similarly to conventional loans.
Since tax returns are replaced with bank statements, your self-employed status transitions from a perceived risk factor into a genuine indicator of your ability to manage, save, and invest funds. By bridging the gap between accounting deductions and real-world receipts, a bank statement loan offers a tailored path to homeownership for entrepreneurs and freelancers alike.
There’s a lot to think about when buying a house – and it’s normal to have questions, especially if you are a first time home buyer.
Maybe you want to change your term or lower your payment or payoff your loan faster. A rate and term mortgage could be your key to both.
Finding a great home loan involves careful consideration of your needs, finances and history. We are here to guide you.
Frequently Asked Questions
People without typical income proof, like tax returns or pay stubs, can still qualify for a mortgage. Self-employed borrowers can show they can repay a loan by providing bank statements that prove a steady income. This flexibility can be especially beneficial for those with fluctuating income or multiple sources of revenue.
- Business Owners
- Independent Contractors
- Entrepreneurs
- Consultants
- Gig Workers
- Realtors
- Retirees
Instead of using traditional income documentation (W-2’s or Tax Returns), bank statement loans only use bank statements to determine the qualifying income. You can use either personal bank statements or business bank statements.
- Personal Bank Statements: If you are self-employed or have personal income sources, you might use your personal bank statements. These typically include income from freelance work, investments, or other sources not tied to a business.
- Business Bank Statements: If you run a business or are self-employed, using business bank statements might be more appropriate. Lenders look at the deposits into your business accounts to assess your income from the business.
To calculate the qualifying income, all deposits are added and then averaged over a 12 month or 24 month period. The resulting number is considered the “monthly income” and used for qualifying and debt-to-income ratio calculation.
To qualify for a bank statement loan, all loan applicants must meet certain requirements, including:
- Consistent deposits into personal or business bank statements.
- Credit Score of 620+
- Minimum reserves/equity for loan program
We have the experience, the social track record, and access to the right resources to get loans done.
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