A bank statement loan is a mortgage that qualifies self-employed borrowers using 12–24 months of bank deposits instead of tax returns or W-2s. The lender averages your deposits (applying an expense factor) to set your income. It's the leading option for business owners whose write-offs shrink taxable income.
How a bank statement loan works
You provide 12 or 24 months of personal or business statements. The lender totals qualifying deposits, applies an expense factor (or uses your business's expense ratio), and averages the result into monthly income used to qualify you. No tax returns, no W-2s.
Who it's for
Self-employed owners, freelancers, 1099 contractors, and commission earners whose tax returns understate real income. If you're a W-2 employee with simple income, a conventional loan is usually cheaper.
Rates, down payment, and requirements
Expect roughly 10–20% down, a mid-600s+ score, and some reserves. Rates typically run modestly above conventional (often about 0.5%–1.5% depending on the file). See bank-statement loan rates and how to apply.
Frequently asked questions
What is a bank statement loan?
A mortgage that qualifies you using 12–24 months of bank deposits instead of tax returns or W-2s — designed for self-employed borrowers.
How does a bank statement loan work?
The lender totals your qualifying deposits, applies an expense factor, and averages them into monthly income to qualify you. No tax returns are used.
Are bank statement loan rates higher?
Usually modestly higher than conventional, because they're non-QM. Shopping multiple lenders keeps the difference small.
How much down payment do I need?
Typically 10–20%, depending on credit, program, and property.