Flexible Financing with Bank Statement Loans
Self-employed individuals or those with non-traditional income sources often face challenges in providing the standard proof of income required for conventional mortgages.
Bank statement loans allow these individuals to access financing based on bank deposits rather than tax returns or pay stubs that don’t accurately reflect their true income.
How does a bank statement loan work?
Instead of traditional income verification documents, applicants are required to submit a specified number of recent bank statements.
Lenders assess the average monthly income based on the bank statements provided.
Bank statement loan requirements
Loan approval depends on a borrower’s ability to provide the following:
- 12-24 months of bank statements
- Credit score of at least 620 (but higher will help you access better rates and terms)
- Down payment of at least 10%
- Debt-to-income (DTI) ratio established by lender
- Loan-to-value (LTV) ratio established by lender
Bank statement loan FAQs
A bank statement loan is an alternative mortgage financing option that may allow eligible borrowers to document qualifying income using bank statements rather than relying exclusively on traditional tax returns or W-2 forms.
Yes. Bank statement loans are commonly considered by eligible self-employed borrowers, business owners, and individuals with nontraditional income documentation.
Documentation requirements vary by lender and loan program. Some programs evaluate 12 or 24 months of personal or business bank statements to help determine qualifying income.
Potentially. Certain bank statement loan programs accept business bank statements, although qualifying income calculations may account for business expenses and other underwriting requirements.