Bank Statement Loans for Self-Employed Borrowers
Bank statement loans help self-employed borrowers qualify using deposit history rather than traditional tax-return income, giving brokers a practical solution when conventional documentation falls short.
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Bank Statements
About program
A bank statement loan is designed for self-employed individuals with strong cash flow but limited traditional W-2 documentation. Instead of relying only on taxable income, lenders review eligible personal or business bank statements to evaluate cash flow and determine qualifying income.
Program Highlights
Qualification & Documentation
These guidelines explain how income is calculated, what documentation may be used, and what helps a bank statement loan move through underwriting more efficiently.
- Qualification based on eligible bank statement deposits
- Personal and business bank statement options available
- 12- or 24-month documentation paths
- Minimum 620 FICO
- No tradeline requirement with 3 credit scores
- 50% standard expense factor
- Minimum 10% expense factor with accountant letter
- Self-employed borrower focus
- Complete and consistent documentation helps reduce delays
Loan Structure & Flexibility
These features outline available qualification methods, LTV limits, cash-out options, and other program flexibilities.
- Up to 90% LTV
- Purchase, refinance, and cash-out refinance options may be available
- Unlimited cash-in-hand
- Flexible qualification for self-employed borrowers
- Additional program features may vary by series
Property & Loan Parameters
These guidelines cover eligible property types, occupancy options, and loan amounts supported by the program.
- Single-family homes, condos, condotels, studios, and 2–4 unit properties
- Non-perm up to 90% LTV
- Loan amounts up to $4 million
- Loan amounts up to $5 million for preferred brokers
- Additional property guidelines may apply
Required to Disclose
Credit report
(cannot be older than 60 days) - must be merged into the LOS.
Borrowers' ID
(passport or driver's license).
Purchase contract
(if applicable)
Complete loan application
(including income & employment)
Submission form completed
12/24 months of bank statements
(all months, all pages)
Income calculation completed using the form to the left.
(Optional).
Required to Underwrite
(in addition to above)
Credit report
(cannot be older than 60 days) - must be merged into the LOS.
Borrowers' ID
(passport or driver's license).
Purchase contract
(if applicable)
Complete loan application
(including income & employment)
Submission form completed
12/24 months of bank statements
(all months, all pages)
Income calculation completed using the form to the left.
(Optional).
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FAQ
Does the borrower need to provide both personal and business bank statements for qualification?
No. Borrowers can qualify using either personal or business bank statements, depending on their income structure. They must provide 12 or 24 consecutive months of statements. This flexibility helps mortgage brokers match the program to different self-employed borrower scenarios.
Is a CPA letter required to verify the borrower’s business for a bank statement loan?
No. A CPA letter is not required. Business ownership may also be verified through an EA, PTIN, or CTEC-registered tax preparer, or by providing a valid business license. This makes it easier for brokers to document business activity for self-employed borrowers.
How are bank statement deposits used to calculate qualifying income?
Underwriters review the borrower’s average monthly deposits over the selected 12- or 24-month period and apply an expense factor to determine qualifying income. This allows self-employed borrowers to qualify based on cash flow instead of tax-return income alone.
When is a bank statement loan the right fit?
Bank statement loans are often a strong fit for self-employed borrowers whose tax returns do not fully reflect their income. Brokers commonly use this program for business owners, entrepreneurs, 1099 earners, and other borrowers with strong cash flow who may not qualify through traditional income documentation.
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