What Is Bank Statement Loan?
Bank Statement Loan: A mortgage for self-employed borrowers that uses bank deposits instead of tax returns to verify income.
A bank statement loan qualifies self-employed borrowers on deposits to their bank accounts over 12 or 24 months, rather than income from tax returns.
How income is calculated
- Personal statements: average monthly deposits, excluding transfers and one-time deposits
- Business statements: average deposits multiplied by an expense factor (often 50%), or by an expense ratio from a CPA
Typical terms
- Down payment often 10% to 20% or more
- Higher rates than conventional loans
- Two years of self-employment, usually verified by a business license or CPA letter
Who it fits
Business owners and freelancers whose tax returns show low income because of write-offs.
Good to know
This is a non-QM loan. It can be used for a primary home, second home or investment property.