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Bank statement loans
Your accountant did a good job, and that turns out to be the problem. A bank statement loan qualifies you on the money that actually moved through your accounts, rather than on the number sitting at the bottom of your Schedule C.
Last reviewed 22 August 2026 · Mark Ruhl, NMLS #105591
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The problem this solves
Self-employed borrowers get penalized twice for the same deduction. The first time is in April, when you legitimately write off the truck, the home office, the equipment and the depreciation. The second time is in June, when a lender opens that same return, sees the net figure at the bottom of it, and tells you that you don't earn enough to buy a house you can obviously afford.
A conventional lender uses your net income after those deductions, averaged over two years, and for a lot of business owners that number lands 40 to 60 percent below what actually shows up in the bank. Nothing improper is happening on either side of that, the tax code and the underwriting guideline are simply measuring two different things.
So a bank statement loan goes and measures a third thing, which is the money that actually moved.
How the income calculation works
The lender takes 12 or 24 months of statements, adds up the qualifying deposits, and then applies an expense factor (their assumption about how much of that money went straight back out the door as business costs) to arrive at your net. That expense factor is the whole ballgame, and it varies more from lender to lender than anything else in the program.
| What varies | Typical | Why it matters |
|---|---|---|
| Statement period | 12 or 24 months | 12 months usually prices slightly higher. If your last year was much better than the one before it, 12 helps you. |
| Business vs. personal | Either | Personal statements often get a more generous treatment, because deposits there are already post-expense. |
| Expense factor | Varies widely | Some lenders apply a fixed percentage. Some accept a CPA-prepared expense letter. Some will use a P&L. The difference between programs can be tens of thousands in qualifying income. |
| Ownership percentage | Applied to deposits | Own 50% of the business, and typically 50% of business deposits count. |
Two lenders can look at the very same twelve months of statements and arrive at qualifying incomes that differ by 30% or more, purely because of how each one treats expenses. So this is not a program where you take the first quote you're handed. It's exactly the kind of thing a broker is for, since I can run your statements against several programs before anybody pulls credit.
What you'll need
- 12 or 24 months of consecutive statements, meaning all of the pages, including the blank ones, from every account being used.
- Proof you've been self-employed at least two years, which can be a business license, a CPA letter, or your Secretary of State registration.
- Credit score, typically 620 to 680 depending on the program and on how much you're putting down.
- Down payment, typically 10% to 20%. More money down improves both your approval odds and your pricing, and this is one of the products where that's especially true.
- Reserves, commonly 3 to 6 months of the full payment, still sitting there after closing.
One practical warning here. Transfers between your own accounts get stripped out as non-qualifying deposits, and so do loan proceeds, tax refunds and one-time windfalls. So if you routinely move money from the business side to the personal side, expect the analysis to come out leaner than your statements look at a glance. Tell me how you handle your accounts up front and I'll tell you which set we should use.
What it costs
These are non-QM loans (non-qualified mortgage, meaning the lender is keeping the risk on its own books rather than selling the loan on to Fannie Mae), so you should expect pricing above conventional. The exact spread depends on your credit, your down payment and which program ends up fitting, and I'm not going to publish a number here that I can't stand behind for your file.
What I will say plainly is this. If you qualify conventionally, take the conventional loan. Some self-employed borrowers assume they need a bank statement program when they really don't, because two years of returns with add-backs for depreciation and depletion sometimes produce enough income after all. So I'll check that first, every time, because it's cheaper for you.
Who this is actually for
- Contractors and trades, where heavy equipment write-offs and seasonal income do a number on the return.
- Restaurant and retail owners, where the margins look thin on paper but the cash flow is real.
- Freelancers, consultants and creatives, with 1099 income arriving from a lot of different payers.
- Truck drivers and owner-operators, where per-diem and depreciation gut the net number.
- Real estate agents, with commission income and large deductible expenses running against it.
- Anyone two years into a business that's growing, because averaging a weak year against a strong one understates where you actually are right now.
Common questions
Do I need tax returns at all?
Generally no, and that's the whole point. That being said, some lenders ask for a signed 4506-C anyway, and some will want a CPA letter confirming that you file as self-employed, so expect to prove the business exists even if nobody ever reads the return.
How many months of deposits do they count?
12 or 24, depending on the program. Twenty-four months smooths out a lumpy year, and twelve months captures recent growth, so if your business is up sharply, ask specifically about the twelve-month programs.
Can I use this for an investment property?
Sometimes, though for a rental a DSCR loan is often cleaner, because it qualifies the property on its rent and skips your income entirely.
Will I be stuck with this loan forever?
No. Plenty of borrowers use a bank statement loan to buy the house, and then refinance conventionally two or three years later once their returns have caught up with reality. That's a normal and sensible path, and I've walked people down it more than once.
Send me twelve months and I'll run the math
Tell me roughly what your deposits look like, what you write off, and what you're trying to buy, and I'll come back with what a few different programs would give you for qualifying income, all before anybody touches your credit.
Requirements described here are typical of published non-QM lender program guidelines and vary considerably by lender, borrower and property. Nothing here is a commitment to lend. Tax treatment of business expenses is a question for your CPA, not your lender.