A good fit if
- You've been self-employed for about two years
- Write-offs make your taxable income look low
- Your deposits are steady and easy to follow
Probably not if
- You're a W-2 employee
- Most of your income is paid in cash and never deposited
- Your business is less than a year old
How Bank Statement Qualification Works
Instead of tax returns, you provide 12 or 24 months of business or personal bank statements. The lender adds up eligible deposits, applies an expense factor for business accounts, and averages the result into monthly income.
Example: $480,000 of business deposits over 24 months is $20,000 a month. With a 50% expense factor, qualifying income is $10,000 a month, often far more than the same owner's tax return shows.
Bank Statement Loan Requirements
- Credit: from about 600–620 at some lenders, with most programs at 620–660. The best LTVs need 720+.
- Down payment, primary home: usually 10–20%. Up to 90% LTV is available at some lenders with 720+ credit.
- Cash-out: usually up to 70–75% LTV, and 80% at some lenders.
- Self-employment: usually 2 years; some lenders accept 1 year with prior experience in the same field.
- Debt-to-income: up to 50%, and 55% at some lenders for strong files.
- Loan size: up to about $3 million, higher at some lenders.
- Reserves: often 3–6 months, more for larger loans.
The full guide, with cross-lender ranges, is in bank statement loans for self-employed borrowers.
Business vs. Personal Statements
- Business statements: lenders apply an expense factor, most often 50%. A letter from your CPA, enrolled agent, or tax preparer, or a third-party P&L, can support a lower one, sometimes as low as 10–20%. Some lenders use a set factor by type of business.
- Personal statements: lenders may count most or all deposits, but you'll often need business statements too, to show the business is separate.
12 Months or 24?
12 months works well if your income has grown recently. 24 months averages two years and often gets slightly better pricing. I'll run both on your statements to see which gives you the stronger number.
How to Qualify for a Bank Statement Loan
- Pull your statements. Download 12–24 months of complete statements, every page.
- Choose the account. Decide whether business or personal statements tell the stronger story.
- Ask your preparer about expenses. If your real expense ratio is under 50%, a letter can raise your income.
- Check your debts. Your monthly debts plus the new payment should stay within the lender's DTI limit.
- Get prequalified. Send me the basics, and I'll calculate your income both ways before you shop.
Documents You'll Need for a Bank Statement Loan
- 12 or 24 months of business or personal bank statements
- Proof the business exists: a business license, CPA or tax preparer letter, or state filing
- A short business narrative at some lenders (what you do, number of employees, location)
- Two months of statements for your down payment and reserves
- Photo ID and credit authorization
- Purchase contract or current mortgage statement
No personal or business tax returns are used to calculate income.
Bank Statement Loan vs. P&L Loan
| Bank statement loan | P&L loan | |
|---|---|---|
| Income based on | Deposits minus an expense factor | Net income on the P&L |
| Paperwork | 12–24 months of statements | P&L, preparer letter, 0–3 months of statements |
| Best when | Deposits are strong and consistent | Real expenses are low and books are clean |
Paid on 1099s rather than through a business? A 1099 loan is often simpler.
Bank Statement Loan FAQ
What credit score do I need for a bank statement loan?
Many lenders start around 620, and some go to about 600 with a larger down payment. The best rates and highest LTVs usually need 720 or higher.
What deposits don't count?
Transfers between your own accounts, loans, refunds, and large one-time deposits that aren't business income are usually excluded.
What if my income is seasonal?
That's fine. Lenders average deposits over the full 12 or 24 months, so slow months are balanced by strong ones.
Can I get a bank statement loan with one year self-employed?
Some lenders allow it, usually if you worked in the same field before. Two years is the most common requirement.
Can I use it for a home I'll live in?
Yes. Bank statement loans work for primary residences, second homes, and investment properties.
Available for properties in California. Guidelines shown are typical and are not a commitment to lend. Your actual terms depend on credit, income calculation, property, and the lender's current guidelines, and can change without notice. Bank statement loans may cost more than conventional loans.