Bank Statement Loans

Bank Statement Loans: Mortgages for Self-Employed Borrowers

Bank statement loans provide mortgage financing for self-employed borrowers using bank deposits instead of tax returns.

This alternative documentation method recognizes that legitimate business deductions often reduce reported income while your actual cash flow remains strong.

For self-employed professionals, business owners, and independent contractors, bank statement loans can offer a path to homeownership when traditional lenders cannot accommodate them.

What is a Bank Statement Loan?

Definition

A bank statement loan is a mortgage program that uses your bank deposits to verify income instead of traditional tax returns. This alternative documentation method allows self-employed borrowers and business owners to qualify for home financing based on their actual cash flow.

How it works

Lenders review your personal or business bank statements, averaging your monthly deposits to calculate your qualifying income. This approach recognizes that legitimate business deductions often reduce reported net income while your actual earning capacity remains strong.

Key advantage

Bank statement loans bridge the gap between your reported income on tax returns and your true financial capacity, making homeownership accessible to self-employed professionals who have strong cash flow but face challenges with traditional income documentation.

Another Lender for Novus Home Mortgage

Coby MatushNMLS Verified

Loan Officer

Novus Home Mortgage

NMLS #1531494

20225 Water Tower Blvd, Suite 400, Brookfield, WI 53045

Email: cmatush@novushomemortgage.com

Phone: 724-787-7778

4.8★★★★★(237 Google reviews)

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How Bank Statement Loans Work

A bank statement loan uses your bank deposits instead of tax returns to verify income. You typically need as little as 12 months of bank statements, a 660 credit score, and 10% down payment. This program may be suitable for self-employed borrowers who were denied conventional mortgages due to low reported income from business deductions.

Basic Bank Statement Loan Eligibility

You may be eligible for a bank statement loan if you have:

• Consistent monthly bank deposits
• 660 credit score
• 10% down payment
• 2 years in business

Common Bank Statement Loan Eligibility Requirements

Credit score:

660 FICO score

Down payment:

10%

Business history:

2 years in business

Documentation:

As little as 12 months of bank statements

Loan amounts:

Up to $3,000,000

Reserves:

6 months of reserves

Mortgage history:

Typically no mortgage lates in the past 12 months

Bankruptcy/foreclosure:

Typically no bankruptcy, foreclosure, or deed-in-lieu in the last 4 years

Income verification:

Consistent, verifiable deposits

Gift funds:

Allowed for primary residences

Why You Need Another Lender

If you've been denied a mortgage despite having strong income, you're not alone. Many traditional banks simply don't offer programs designed for self-employed borrowers. They rely on standard documentation like tax returns, which don't tell the full story of your financial health.

Your first bank just doesn't offer the right program for you.

Think of it like when a customer asks for something your business doesn't offer. Maybe they want delivery but you only do pickup, or they need a service you don't provide. You're not saying no because there's anything wrong with them—you just don't offer that particular service. Same with mortgages. Traditional banks work great for most people, but they don't offer the programs that self-employed borrowers need.

Traditional banks use conventional underwriting that works well for W-2 employees but struggles with self-employed income. Your business deductions are smart financial planning, but they reduce your reported income on paper. Conventional programs see this lower number and can't approve you, even though your actual cash flow is strong.

Bank statement loans are perfect for self-employed professionals who have strong cash flow but low reported income due to legitimate business deductions, run successful businesses but face traditional lender roadblocks, or want to buy a home but keep getting told "no" despite solid finances.

This isn't about finding loopholes or gaming the system. It's about working with lenders who understand how self-employed income actually works. Bank statement loans are offered by lenders who work with self-employed borrowers every day. They look at your actual cash flow—the money that actually comes into your account each month—rather than what shows up on your tax returns.

For a no obligation conversation about your mortgage, contact Coby Matush (#1531494) of Novus Home Mortgage at 724-787-7778.

Example Use Cases and Scenarios

How Do Bank Statement Loans Work?

Bank statement loans follow the same basic mortgage process as conventional loans, with one key difference: income verification. This alternative documentation method allows self-employed borrowers to qualify using their actual cash flow instead of tax returns.

The Bank Statement Loan Process

1. Income Documentation & Analysis Process

Instead of tax returns and W-2s, you provide 12 months of personal or business bank statements. The income analysis process begins with deposit review where lenders examine your statements, followed by income averaging to calculate stable monthly deposits. Lenders may deduct legitimate business expenses from deposits during expense deductions, then complete the qualifying income calculation to determine your final income figure. This process typically results in much higher qualifying income than traditional tax return analysis.

2. Standard Mortgage Process

Everything else follows the same process as conventional loans: credit check with minimum 660 FICO score, property appraisal using standard residential appraisal, title search to ensure clear property ownership, and standard mortgage documentation including loan application, disclosures, and insurance requirements. The only difference is how your income is verified - everything else uses identical underwriting standards and consumer protections.

3. Underwriting

Experienced underwriters review your complete profile using the bank statement income analysis instead of traditional income verification. They assess your creditworthiness including payment history and debt-to-income ratio, property value through appraisal and market analysis, and ability to repay based on your actual cash flow. The underwriting process includes the same risk assessment, just with alternative income documentation.

4. Approval & Closing

Once approved, the closing process is identical to conventional mortgages. You'll sign the same documents including promissory note, deed of trust, and closing disclosure, pay the same types of fees such as origination, appraisal, and title insurance, and receive the same level of consumer protection including RESPA disclosures and right of rescission for refinances. The loan terms, interest rates, and repayment structure follow standard mortgage industry practices.

Real-World Example: Bank Statement Loans

Benefits & Considerations

Bank statement loans offer significant advantages for self-employed borrowers, but they also come with important considerations to weigh.

Frequently Asked Questions About Bank Statement Loans

Get answers to the most common questions about bank statement loans. Whether you're wondering about qualification requirements, documentation needs, or how the process works, we've covered the essential information below.

Next Steps: Continue With Your Mortgage

Bank statement loans may provide a path to homeownership for self-employed borrowers turned down by traditional lenders. Our listed loan officers understand self-employed challenges and can help determine if this program might fit your situation. They'll review your bank statements, assess eligibility, and guide you through the process.

For a no obligation conversation about your mortgage, contact Coby Matush (#1531494) of Novus Home Mortgage at 724-787-7778.