Bank statement loans

How does a bank statement loan work?

A bank statement loan qualifies you on 12 or 24 months of deposits into your personal or business bank accounts instead of tax returns. The lender totals eligible deposits, applies an expense factor to business accounts — commonly 50 percent, or a lower figure documented by your CPA — and divides by the months to arrive at monthly income. No W-2s, no returns, no transcripts.

How income is calculated

Personal statements are the simplest: eligible deposits, averaged. Business statements get an expense factor, because the deposits are revenue rather than profit. Lenders assume 50 percent by default, and will accept a lower factor with a letter from your CPA describing the business's actual margins.

Transfers between your own accounts, loan proceeds and large one-off deposits are excluded. Twenty-four months usually prices better than twelve because it shows the income is durable.

Who it is for

Self-employed for at least two years, normally, though some lenders accept one year with a prior history in the same field. Realtors, contractors, restaurant owners, consultants, anyone whose Schedule C bears no resemblance to their bank balance.