Bank Statement Loans Explained

Bank Statement Loans are designed for self-employed borrowers, business owners, and independent contractors who don’t have traditional W-2 income or tax returns that accurately reflect their earnings.

Instead of using tax returns, lenders analyze 12–24 months of bank statements to determine your average monthly income and qualify you for a mortgage based on that.

🏦 How Bank Statement Loans Work

Instead of tax documents, your income is calculated directly from your bank deposits.

1. You provide 12–24 months of personal or business bank statements

2. The lender averages your monthly deposits

3. A percentage (usually 50–100%) of that average becomes your qualifying income

Example:

If your business deposits average $20,000/month and 50% is counted as income, you can qualify using $10,000/month as your income.

📋 Key Benefits

• No tax returns required — qualify based on your cash flow

• Ideal for self-employed borrowers, freelancers, or 1099 earners

• Can use personal or business accounts

• Available for primary, secondary, or investment properties

• Flexible programs with competitive rates and terms

📊 Typical Requirements

This is a tip.

Using 24 months of statements can help smooth out fluctuations in income and often leads to stronger loan approval.

💡 Who Bank Statement Loans Are Best For

• Small business owners and entrepreneurs

• Freelancers or consultants with irregular income

• Real estate agents, truck drivers, contractors, and gig workers

• Investors who write off business expenses but have strong revenue flow

🧠 Helpful Insights

• Deposits must come from legitimate business activity

• Lenders may exclude transfers between accounts

• Co-borrowers’ income can often be combined if verified properly

• Can be used for purchase or refinance transactions

Bank Statement loans make it possible for successful entrepreneurs to qualify for the financing they deserve — even if their tax returns don’t tell the full story.