Bank Statement Loans
Available in Georgia, Florida, South Carolina, Alabama, Tennessee
A bank statement loan lets a self-employed borrower qualify using 12 or 24 months of bank deposits instead of tax returns. It exists for business owners whose legitimate write-offs make their taxable income look far smaller than their actual cash flow. Expect a higher rate than a conventional loan in exchange.
Why tax returns work against self-employed borrowers
Conventional underwriting uses net income after deductions. That is the correct number for the IRS and the wrong number for measuring what a business owner can actually afford. A contractor who grosses well into six figures and writes off vehicles, equipment, a home office, and depreciation can show a fraction of that on line 31 of a Schedule C.
Nothing about that is improper. It is what the tax code is for. But it means the same person can be told they do not qualify for a house they could comfortably pay for.
How the income calculation actually works
We average qualifying deposits across the statement period, then apply an expense factor to estimate net income. The default expense factor is 50%, and it applies the same way to business and personal statements.
A CPA-documented expense ratio can be used instead of the 50% default, down to a floor of 10%. That option is the whole ballgame for a lot of borrowers and most have never heard of it. A service business running at 20% expenses is being charged 50% by default.
Take a borrower with $30,000 in monthly deposits. At the 50% default, that is $15,000 in qualifying income. At a documented 25% expense ratio, it is $22,500. Same borrower, same business, meaningfully different approval.
Deposits that generally do not count: transfers between your own accounts, loan proceeds, one-time asset sales, and anything you cannot show came from the business.
Who qualifies for a bank statement loan?
Two years of self-employment is standard. With compensating factors we can look at less, but never below twelve months. You need at least 25% ownership of the business.
Twenty-four months of statements usually prices slightly better than twelve.
| Credit score | Maximum LTV | Down payment |
|---|---|---|
| 720+ | 90% | 10% |
| 660+ | 80% | 20% |
| 640+ | 75% | 25% |
How does it compare to a conventional loan?
A bank statement loan is not a worse loan. It is a different measurement of the same borrower. Plenty of clients use one to buy, then refinance conventional in a few years once the returns line up.
One structural advantage worth noting: there is no mortgage insurance at any loan-to-value, including at 90%.
| Bank statement | Conventional | |
|---|---|---|
| Income documentation | Bank deposits | Tax returns, W-2s |
| Typical minimum down | 10% at a 720 score | As low as 3% |
| Mortgage insurance | None at any LTV | Required under 20% down |
| Reserves | 3 months | Varies |
| Maximum loan amount | $2,000,000 | Conforming limits |
Common questions
Do I need two years of self-employment?
Two years is standard. With compensating factors we can look at less, but never below twelve months.
Can I use personal statements instead of business statements?
Yes. The same 50% expense factor applies either way, so there is no scoring advantage to one or the other, but business statements are usually the cleaner route because the deposits are easier to tie to the business.
Will large one-time deposits help me?
Usually not. Underwriters exclude deposits that are not recurring business revenue, including asset sales, gifts, loan proceeds, and transfers between your own accounts. Consistency matters more than any single month.
Can I use a bank statement loan for an investment property?
Yes. A DSCR loan is often the better tool for an investment purchase since it qualifies on the property income rather than yours, but we can run both and compare.
How much higher is the rate?
This changes weekly, so we do not publish a number. Call and we will quote a bank statement option and a conventional option side by side so you can see the real difference for your situation.
This is not a commitment to lend. Rates, programs, and terms are subject to change without notice. All loans are subject to credit approval and property qualification.