Loans Self-employed and investors Bank statement loans
Bank statement loans: qualify on your deposits
A bank statement loan figures your income from 12 or 24 months of deposits instead of from your tax returns. It is built for self-employed borrowers whose returns show less income than the business brings in, after write-offs.
New to this loan? Start here: Buying when you are self-employed A 3-minute lesson
Who it fits
Business owners and self-employed borrowers whose tax returns show less income than their deposits support, often because write-offs lower taxable profit. Lenders still review your credit, your savings and the home, and most want a history of self-employment.
Many incomes here are seasonal: contractors, ranchers, guides and businesses tied to tourism. Deposits can be strong in summer and light in winter. A 24-month review smooths out the seasons, while a 12-month review reflects the most recent year. We figure it both ways before choosing.
What it costs, plainly
Bank statement loans usually cost more than agency loans: a higher rate, a larger down payment and more money in reserve after closing. They are still the right tool when your tax returns do not show enough income to qualify for a home your deposits show you can afford.
So we start with your tax returns. Lenders add back write-offs that are not cash out of pocket, such as depreciation. If an agency loan works, it usually costs less. If it does not, a bank statement loan can, and once your returns show the income, a refinance into an agency loan is possible later.
Calculators and guides
Common questions
Personal or business statements?
Either, depending on the lender. With business statements, the expense allowance comes off the business deposits. With personal statements, the deposits must show the income the business pays you.
How is the expense allowance set?
Lenders apply a standard percentage to business deposits, or use a letter from your CPA or tax preparer, or a profit and loss statement, that shows your actual expenses.
Is there a prepayment penalty?
Not on a home you live in: federal rules allow a prepayment penalty only on certain qualified mortgages, and these loans are not qualified mortgages. On a rental, which is business credit, a penalty is common.
Can I move to a regular loan later?
Yes. Once your tax returns show the income, a refinance into a conventional, FHA or VA loan is possible if the numbers work.