Question 1

What is a bank statement loan?

Accepted Answer

A bank statement loan is a type of NON-QM mortgage that uses your bank deposits to calculate income instead of tax returns. This is ideal for self-employed borrowers who write off business expenses and show lower taxable income on their returns. We analyze 12-24 months of bank statements to determine your qualifying income.

Question 2

How is income calculated on a bank statement loan?

Accepted Answer

Income is calculated by averaging your deposits over 12 or 24 months. For business accounts, an expense ratio (typically 50%) is applied to account for business expenses. For example, if your average monthly deposits are $20,000 and we use a 50% expense ratio, your qualifying monthly income would be $10,000.

Question 3

Can I use personal or business bank statements?

Accepted Answer

You can use either personal bank statements, business bank statements, or a combination of both. Business bank statements typically require an expense ratio to be applied, while personal bank statements may qualify with a lower or no expense ratio depending on the program.

Question 4

What expense ratio will be used for my bank statements?

Accepted Answer

Expense ratios typically range from 50% to 90% depending on your industry, business type, and the specific loan program. Some industries with lower overhead (like consulting) may qualify for lower expense ratios. A CPA letter can sometimes be used to support a custom expense ratio.

Question 5

Do I need to be self-employed to qualify?

Accepted Answer

Yes, bank statement loans are designed for self-employed borrowers. You typically need to have been self-employed for at least 2 years in the same business or industry. This includes business owners, independent contractors, freelancers, and gig economy workers.

Question 6

What documents are required for a bank statement loan?

Accepted Answer

Required documents include: 12-24 months of bank statements, 2 years of business license or tax returns (to verify self-employment), CPA letter (for P&L programs), standard mortgage documents (ID, insurance, etc.). No W-2s or pay stubs are required.

Question 7

Can I use a bank statement loan for investment properties?

Accepted Answer

Yes, bank statement loans are available for primary residences, second homes, and investment properties. Investment properties may have slightly different LTV limits and pricing compared to owner-occupied properties.

Question 8

What is the P&L Only option?

Accepted Answer

The P&L Only option allows you to qualify using a CPA-prepared profit and loss statement instead of bank statements. This can be beneficial if your bank statements don't accurately reflect your business income or if you have multiple business accounts that are difficult to document.

Bank Statement Loans for Self-Employed Borrowers

How Bank Statement Loans Work

12 Month Bank Statements

24 Month Bank Statements

P&L Only Option

Eligibility Requirements

Perfect For:

Frequently Asked Questions

Bank Statement Income Calculator

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