Question 1

What is a bank statement loan?

Accepted Answer

A bank statement loan is a mortgage that uses your business or personal bank statements to verify income instead of traditional tax returns or W-2s. Lenders calculate your income based on average monthly deposits over 12 or 24 months, typically using 50-100% of deposits depending on your business expenses.

Question 2

How much of my bank deposits count as income?

Accepted Answer

Most lenders use 50% of your total deposits for personal bank statements (accounting for business expenses) or 100% for business accounts that only show net income. Some programs offer higher percentages (75-100%) if you can document lower expense ratios through a CPA letter or P&L statement.

Question 3

Do I need to provide tax returns at all?

Accepted Answer

No tax returns are required for qualification. However, you may need to provide at least one year of tax returns to prove self-employment history (2+ years in the same line of work). The tax returns are not used to calculate your income—only your bank statements determine qualifying income.

Question 4

What credit score do I need?

Accepted Answer

Minimum credit score is typically 640, but 680+ gets you the best rates and terms. If your score is between 640-679, expect slightly higher interest rates and possibly a larger down payment requirement (20-25% instead of 15%).

Question 5

Can I use both personal and business bank statements?

Accepted Answer

Yes, you can use either personal or business bank statements, or a combination of both. Business statements often result in higher qualifying income since they show gross deposits. Personal statements work well for sole proprietors who deposit business income into personal accounts.

Question 6

How long does it take to get approved?

Accepted Answer

Pre-approval typically takes 24-48 hours once we receive your bank statements and credit authorization. Full approval and closing usually takes 21-30 days, similar to conventional loans. The process is faster than traditional mortgages because there's no need to verify employment or wait for tax transcripts.

Question 7

What if my income varies month to month?

Accepted Answer

That's completely normal for self-employed borrowers. Lenders average your deposits over 12 or 24 months to smooth out seasonal fluctuations. Using 24 months of statements can actually help if you've had recent income growth, as it shows a longer track record of earnings.

Question 8

Can I refinance my current mortgage with a bank statement loan?

Accepted Answer

Absolutely. Bank statement loans are available for purchase, rate-and-term refinance, and cash-out refinance (up to 80% LTV). Many self-employed borrowers use cash-out refinances to access equity for business expansion or debt consolidation.

Question 9

Are interest rates higher than conventional loans?

Accepted Answer

Bank statement loan rates are typically 0.5-1.5% higher than conventional conforming loans due to the flexible underwriting. However, they're often comparable to or better than other NON-QM products. Your rate depends on credit score, down payment, loan amount, and property type.

Question 10

What types of properties can I buy?

Accepted Answer

You can purchase primary residences, second homes, and investment properties (1-4 units). Eligible property types include single-family homes, condos, townhomes, and 2-4 unit multifamily properties. Investment properties typically require 20-25% down payment.

Feature	Conventional Loan	Bank Statement Loan
Income Verification	Tax returns, W-2s, pay stubs required	12-24 months bank statements only
Best For	W-2 employees with steady income	Self-employed, business owners, 1099 contractors
Minimum Credit Score	620 (varies by lender)	640 (680+ for best rates)
Down Payment	3-20% depending on loan type	15-20% (10% possible in some cases)
DTI Ratio	Up to 43-50% (strict calculation)	Up to 50% (flexible calculation)
Interest Rate	Lower rates (market rate)	0.5-1.5% higher than conventional
Approval Time	3-5 days (employment verification delays)	24-48 hours (no employment verification)
Tax Write-Offs	Lower income = harder to qualify	Write-offs don't hurt you—use gross deposits

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