Self-employed? Turn your deposits into qualifying income
Bank Statement Income
Lenders pull net positive cash flow from your statements, then apply an industry expense factor.
Consulting, freelance, coaching
Down Payment
Minimum 20% for 720+ credit ($100,000).
Plus $17,280 of closing costs, priced for Texas. See the itemization →
Qualifying Monthly Income
$10,500
Monthly Payment
$3,680
Debt-to-Income: 36.0%
Max allowed: 50%
Qualifying income depends on whether the lender uses 12 or 24 months, and the expense factor they apply. Today’s rates →
Altgage Inc. NMLS #2447252 | 100 Cambridge St, Floor 14, Boston, MA 02114|Bank statement loans are designed for self-employed borrowers who have strong income but can't document it through traditional W-2s or tax returns. If your tax returns show business deductions that make your income look lower than it really is, bank statement loans let you qualify based on actual cash flow.
Lenders compute your net positive cash flow from 12 or 24 months of statements (average deposits minus average withdrawals), then apply an industry expense factor as a buffer. A consultant might be discounted 30%; a restaurant owner 70%. What's left is your qualifying income.
Bank statement loans typically have higher rates (1-2% above conventional), require larger down payments (10-20%+), and have lower max LTVs. But for self-employed borrowers who can't qualify conventionally, they provide a path to homeownership.
The product exists for one specific mismatch: your business is doing well and your tax return doesn’t show it, because the deductions that are good tax planning are bad mortgage underwriting.
Typical borrowers. Self-employed for two years or more — contractors, consultants, agency owners, restaurant and retail operators, realtors, physicians in private practice, gig and 1099 earners with steady deposits. Also business owners who take distributions rather than a salary, where a W-2 approach understates income badly.
What’s generally required. 12 or 24 months of personal or business statements, 10–20% down, a credit score usually starting around 620–660 with pricing improving above 700, several months of reserves, and proof the business exists and has for two years — a CPA letter or a business license.
What isn’t required. Tax returns, W-2s, pay stubs, or a traditional employment verification.
If your returns show income that genuinely supports the payment, take a conventional loan instead — it will be cheaper. Bank statement loans exist for the gap, not as a shortcut, and the affordability calculator will tell you whether you need one.
Two variables set your qualifying income, and they move it more than most borrowers expect.
The period. 12 months is easier to assemble and works well if your business has grown recently — you’re not averaging in a weaker prior year. 24 months usually prices better because it gives the lender more data, and it smooths a seasonal business. If last year was your best year, ask for 12.
The expense factor. The lender doesn’t count your deposits as income. They apply an assumed expense ratio to approximate net profit — a consultant with minimal overhead might be discounted around 30%, a restaurant with heavy cost of goods closer to 70%. Some lenders will accept a CPA-prepared profit and loss statement in place of their default factor, which is worth asking about if your actual margins are much better than their assumption.
Between the period and the factor, the same deposits can produce qualifying income that differs by tens of thousands depending on which lender reviews them. That’s why shopping this product matters more than shopping a conventional loan.
A bank statement loan qualifies a self-employed borrower on deposits into their bank accounts rather than on tax returns. The lender reviews 12 or 24 months of statements, applies an expense factor to approximate net income, and underwrites from that figure — no W-2s, pay stubs or returns required.
Self-employed borrowers with two or more years in business whose tax returns understate their actual cash flow. Typical requirements are 10–20% down, a credit score from around 620–660, several months of reserves, and evidence the business has operated for two years.
The lender averages deposits across 12 or 24 months, then applies an expense factor — often 30% to 70% depending on your industry — to approximate net profit. The result is your qualifying income. Some lenders will substitute a CPA-prepared profit and loss statement for their default factor.
Typically 1–2% above a comparable conventional loan, reflecting that the loan is non-QM and can’t be sold to Fannie Mae or Freddie Mac. The spread narrows with a larger down payment and a stronger credit profile.
Most lenders accept either, and many accept a combination. Business statements usually require an ownership-percentage adjustment if you have partners; personal statements avoid that but only capture what you actually transferred to yourself. Which produces the better number depends on how you pay yourself.