Today’s post is about: Bank Statement Loans

What it is

A bank statement loan is a mortgage where the lender qualifies you using bank deposits instead of traditional income documents like W-2s and tax returns.

It’s designed for self-employed borrowers who may write off a lot on taxes or don’t show enough taxable income to qualify the “normal” way.

Who it’s for

This loan is best for borrowers who:

Own a business (self-employed)
Have steady deposits, but their tax returns don’t reflect their true cash flow
Want to qualify based on what’s actually coming into the bank

You typically need to show a business exists (for example: business license, CPA letter, or other proof—varies by lender).

What documents are used

Bank statement loans can use either:

Personal bank statements, or
Business bank statements

Some lenders allow a mix, but usually it’s one or the other.

How income is calculated (simple)

If using personal bank statements:
Lenders total up eligible deposits and average them to estimate your monthly income.

If using business bank statements:
Most lenders assume a standard expense ratio and usually count 50% of your deposits as gross income.

Example:

Business deposits average $40,000/month
Lender uses 50%
Qualifying income = $20,000/month

If you can provide a CPA letter:
Some lenders will use a higher percentage if your CPA confirms your business expense ratio is lower than 50%.
So instead of counting 50%, they might count 60%–80% depending on the lender and the CPA letter.

Down payment

Bank statement loans usually require a down payment. In many cases you can go as low as 10% down.

(Your exact minimum down payment depends on credit score, property type, occupancy, and loan size.)

What to watch out for

Not all deposits count: transfers between accounts usually get excluded
Large one-off deposits need a clear explanation
Rates are usually higher than conventional loans (because it’s alternative documentation)
Clean statements matter: overdrafts and negative balances can hurt

Bottom line

Bank statement loans are a strong option if you’re self-employed and your tax returns don’t show the income you actually earn.

If you have consistent deposits and can document your business, you may be able to qualify with as little as 10% down.

—————

Since 2023, Josh Dan has been a licensed loan officer. He takes complex finance and makes it simple, helping borrowers understand their options and make smart decisions. Connect at joshuadan.com.

Jooish News

Jooish News