Bank Statement Mortgage Loans for Self-Employed Borrowers

What is a Bank Statement Loan?

A bank statement mortgage is an alternative-documentation loan designed primarily for self-employed borrowers and business owners whose tax returns may not fully reflect their available cash flow.

Instead of relying solely on traditional income documentation, such as W-2s and tax returns, qualifying income can be evaluated using deposits shown on personal or business bank statements.

Who can benefit from a Bank Statement Loan?

Bank statement loans may be a good fit for self-employed borrowers, business owners, independent contractors, and other borrowers with non-traditional income who have consistent cash flow but may have difficulty documenting income using conventional mortgage guidelines.

These programs can be used for eligible home purchases and refinances, with qualification based on factors including credit history, bank statement income, assets, property type, occupancy, loan amount, and other underwriting requirements.

How Do You Qualify for a Bank Statement Mortgage?

Qualifying for a bank statement mortgage is different from qualifying for a traditional mortgage. Instead of relying solely on tax returns to document income, eligible borrowers may use bank statements to demonstrate qualifying cash flow.

Bank Statement Income

Depending on the program and borrower profile, personal or business bank statements may be used to calculate qualifying income. Deposits and eligible business expenses are reviewed to determine the income that can be used for mortgage qualification.

Credit and Debt-to-Income

Credit score, debt-to-income ratio, housing history and the overall strength of the loan file are considered. Available terms and maximum financing can vary based on credit score, loan amount, occupancy, property type and transaction type.

Property and Loan Options

Bank statement programs may be available for a primary residence, second home or investment property, subject to program requirements. Purchase, rate-and-term refinance and cash-out refinance options may also be available.

Individual Qualification Matters

Bank statement mortgages are not one-size-fits-all. The amount of financing available and documentation required depends on the borrower’s individual circumstances and the specific loan program.