Qualify on what you actually earn
Self-employed borrowers are often penalized by the same thing that makes them good at business: write-offs. Tax returns built to minimize what you owe also minimize the income a lender can count. A bank statement loan sets the tax returns aside and qualifies you on the deposits that actually run through your accounts.
How income is calculated
The lender reviews twelve or twenty-four months of statements and arrives at a monthly qualifying income. How depends on which accounts you use:
- Business statements: deposits are reduced by an expense factor that reflects your type of business. Some programs accept a lower factor with a letter from your CPA or a third-party prepared P&L.
- Personal statements: business income deposited into a personal account can be used, with the business statements reviewed to confirm the source.
- Transfers between your own accounts, loan proceeds and one-off deposits are backed out — only real business income counts.
Choosing the right statement period
Twelve months can capture a strong recent year; twenty-four months can smooth out a lumpy one. Which accounts and which period present your income most accurately is a decision we make with you before anything is submitted — it is often the difference between qualifying and not.
What else the lender reviews
Bank statement loans skip the tax returns, not the underwriting. Expect a review of your credit, reserves, how long you have been self-employed, and proof the business exists — a business license, CPA letter or similar. Lenders also want a short description of what the business does.
Homes, second homes and investments
Bank statement programs are available for primary residences, second homes and investment properties, for purchases and refinances, including cash-out. If the property is a rental, compare it with a DSCR loan, which qualifies on the property's income instead of yours.
Every file is different. Guidelines, pricing and eligibility vary by lender and are subject to credit approval and property eligibility — we’ll walk you through exactly what applies to yours.