Qualify on what your business actually earns.

How does a bank statement loan calculate income?

A bank statement loan calculates qualifying income by reading 12 or 24 consecutive months of statements, adding up the deposits that count as business revenue, and dividing by the number of months. The treatment then splits depending on whose account it is.

• Personal statements. Deposits generally count at 100%, on the reasoning that money reaching a personal account has already had business expenses taken out. Raw business revenue landing in a personal account gets an expense factor anyway.
• Business statements. Gross deposits are reduced by an expense factor, the assumed cost of running your business. The default is 50%. Deposit $80,000 a month, qualify on $40,000.
• The CPA letter that changes the math. A CPA, enrolled agent, or licensed tax preparer can certify your actual expense ratio, and lenders honor figures as low as 10% to 20%. For a service business with almost no cost of goods, moving from the 50% default to a certified 15% roughly doubles qualifying income. This is the single highest-leverage document in the program.
• Ownership percentage. Own 50% of the business and you generally qualify on 50% of the calculated income. Ownership has to be documented, and most programs want at least 25%.

Which deposits are excluded from a bank statement loan?

Underwriters strip anything that is not recurring business revenue: transfers between your own accounts, loan proceeds and credit line draws, tax refunds, gifts, proceeds from selling an asset, customer refunds and chargebacks, and cash deposits that cannot be tied to the business. A file that looked strong on paper often lands 20% to 30% lower once these come out. The honest first step is to pull your own statements and mark which deposits are real revenue before anyone runs a rate.

Should I use 12 or 24 months of bank statements?

Twenty-four months smooths a seasonal business and usually prices slightly better. Twelve months is the right call when your most recent year is materially stronger, or when the business is younger. If the 12-month average is lower than the 24-month average, expect the underwriter to use the more conservative figure. Declining income is a documented risk factor, not a rounding issue.

How much down payment does a bank statement loan require?

• Primary residence: 10% down is achievable at roughly 720+ FICO with compensating factors, 15% is the common real-world answer, and 20% opens the best pricing.
• Second home: typically 15% to 20% down. Investment: typically 20% to 25%.
• Cash-out refinance: usually capped near 80% LTV, sometimes 75% on larger loans.
• Reserves (money left after closing, measured in months of principal, interest, taxes, insurance and HOA): about 3 months at or under 80% LTV, 6 months from 80% to 85%, 9 months over roughly $1.5 million, and 12 months over roughly $2.5 million.
• Reserves can come from more than cash. Brokerage accounts usually count at about 70% of value and vested retirement at about 60%. Gift funds are commonly allowed toward the down payment on a primary residence, but frequently not toward reserves.

What documents does a bank statement loan require?

• 12 or 24 consecutive months of bank statements, every page, including the blank ones and the terms-and-conditions pages. Statement 7 of 24 missing stops the file.
• Proof of two years self-employed: business license, articles of incorporation, Secretary of State filing, or a CPA or EA letter naming your start date and ownership percentage.
• A CPA expense-ratio letter, only if you want less than the default 50% factor. The preparer generally must be the one who filed your most recent business return.
• Two months of personal asset statements to source the down payment and verify reserves.
• Letters of explanation for any large or irregular deposit, and for any credit event in your history.
• Entity documents (operating agreement or corporate resolution) if the business is an LLC or corporation.
• Government photo ID, signed application and authorizations, purchase contract, insurance quote, and for any other property you own, the mortgage statement, tax bill and insurance declaration.

What are the advantages of a bank statement loan?

• Qualifies on real cash flow, not a number optimized for the IRS
• No tax returns, no transcripts, no 4506-C on income
• Works for primary, second home, and investment property
• Loan amounts well into the millions
• Closes on a normal timeline, typically 21 to 35 days

What are the trade-offs of a bank statement loan?

• Rate roughly 1 to 3 points above conventional
• More down payment and more reserves than a conventional loan
• The 50% default factor can badly understate a low-overhead business
• Commingled personal and business accounts create weeks of conditions
• Escrow accounts for taxes and insurance are usually required

Why do bank statement loans get declined?

• Missing pages or a gap in the statements. The most common single killer, and entirely preventable.
• Deposits that cannot be sourced. A $40,000 deposit with no invoice behind it is excluded, or worse, treated as an undisclosed loan.
• The average comes in short once transfers and non-revenue deposits are stripped out.
• Overdrafts, NSF activity, or negative ending balances. A handful across 24 months is survivable. A pattern is not.
• Commingled funds. Personal spending running through the business account makes the expense factor indefensible.
• The CPA will not sign, is not the preparer of record, or writes a letter that does not meet the program's wording.
• Ownership below 25% or undocumented, or a partner who will not confirm the split.
• Under two years self-employed without strong offsetting factors and prior experience in the same field.
• New debt found on the final credit refresh days before closing, a financed truck or a new card, pushing debt-to-income past the ceiling.

What does a typical bank statement loan file look like?

An HVAC company owner, six years in, five trucks and nine employees. The business deposits about $118,000 a month. His Schedule C shows $62,000 of net income for the year, the number every conventional lender used to decline him. His CPA certifies a 38% expense ratio, so 24 months of business statements produce about $73,000 a month of qualifying income. FICO 712, 15% down on $850,000, 6 months of reserves.

About these figures: the ranges on this page describe the non-QM lending market as of September 2026. They are not quotes, offers, or commitments to lend. Guidelines, rates, and program availability vary by lender, property type, and borrower profile, and they change often. Your terms are set after a full review of your credit, income documentation, assets, and the property. Not tax or legal advice. Equal Housing Opportunity.