If you're self-employed, your tax returns are probably optimized to minimize taxable income — which is great for your tax bill, but a real problem when a traditional lender uses that same low number to calculate what you qualify for.
Bank statement loans solve that mismatch by qualifying you off actual cash flow through your bank accounts, not your adjusted gross income. Here's how the program works and who it's built for.
What Is a Bank Statement Loan?
A bank statement loan is a mortgage program designed for self-employed borrowers and independent contractors. Instead of tax returns, lenders review 12 or 24 months of personal or business bank statements to calculate your qualifying income based on actual deposits.
How Qualifying Income Is Calculated
Lenders total your deposits over the statement period and apply an expense factor to estimate your true monthly income:
- Personal bank statements — typically 100% of qualifying deposits count toward income.
- Business bank statements — an expense ratio (often 50%, though it varies by lender and profession) is deducted to account for business costs.
- Large, irregular, or transfer deposits are usually excluded to avoid inflating the number.
The result is often a significantly higher qualifying income than what shows up on your Schedule C.
Who This Program Is Built For
- Business owners and independent contractors filing 1099s or Schedule C.
- Real estate agents, consultants, and freelancers with strong cash flow but heavy write-offs.
- Borrowers who've been self-employed for at least 2 years, though some lenders allow 1 year with strong compensating factors.
You don't need to choose between 12 or 24 months upfront — we can run your numbers both ways and use whichever qualifies you for the strongest terms.
What You'll Need to Qualify
- Credit score, typically 620 or higher depending on the lender and loan-to-value.
- Down payment, generally starting around 10-15% for well-qualified borrowers.
- 12 or 24 consecutive months of bank statements from the same account(s).
- A CPA letter or business license confirming your self-employment, in some cases.
Rates and Trade-Offs
Because underwriting relies on bank deposits rather than fully documented income, bank statement loans typically carry a slightly higher rate than a conventional loan. For most self-employed borrowers, the trade-off is worth it — the qualifying income is often 2-3x higher than what tax returns alone would show.
Is a Bank Statement Loan Right for You?
If your tax returns understate your real income due to write-offs, a bank statement loan can unlock significantly more buying power. If your tax returns already reflect strong income, a conventional loan will likely get you a better rate.