Bank statement loans are designed for self employed and 1099 borrowers who have strong income but write offs on their tax returns. Instead of relying on tax returns, these programs may use personal or business bank deposits to help you qualify, making it easier to buy or refinance based on your real earnings.
Bank statement loans are a type of mortgage designed for self-employed borrowers, freelancers, business owners, and independent contractors who do not have traditional W-2 income. Instead of using tax returns or pay stubs, lenders evaluate income based on bank deposits over 12 to 24 months to determine mortgage eligibility.
Bank statement loans are ideal for entrepreneurs, gig workers, real estate investors, and high-net-worth individuals who have significant cash flow but may show lower taxable income due to business deductions. If you’ve been turned down for a conventional loan because of fluctuating income or complex tax returns, a bank statement loan provides a flexible path to homeownership
Instead of requiring W-2 forms or tax returns, bank statement loans use personal or business account statements to verify income. Lenders review deposits over a 12- to 24-month period, calculating monthly average earnings to determine how much home you can afford. These loans may require a higher credit score and down payment compared to conventional loans, but they offer greater flexibility in income verification.
Bank statement loans can be structured as fixed-rate or adjustable-rate mortgages (ARMs). Borrowers can also access jumbo bank statement loans for higher-priced homes, and some lenders offer interest-only payment options. These loans are available for primary residences, second homes, and investment properties, giving borrowers multiple financing solutions.
Bank statement loans provide income verification flexibility, making it easier for self-employed borrowers to qualify. They offer higher loan limits, lower documentation requirements, and options for those with non-traditional income sources. These loans also allow for higher debt-to-income ratios, recognizing that business owners may have fluctuating earnings.
If traditional mortgage approval has been difficult due to tax return complications, a bank statement loan could be the ideal solution. These loans allow you to qualify based on your actual cash flow rather than taxable income, providing a streamlined approval process. Speaking with a mortgage specialist can help determine if a bank statement loan fits your home financing goals.
Jon Shrum, President of KMC Financial and Team Shrum, specializes in helping self employed and 1099 borrowers qualify using real cash flow, not just tax returns. He guides you through documentation, finds the right programs, and explains rates and terms clearly. With honest advice and a smooth process, Jon makes bank statement financing simple and achievable.
Bank statement loans are designed for self employed and 1099 borrowers who have strong income but significant write offs on their tax returns. These FAQs explain how bank statement mortgages work, who may qualify, and when using deposits instead of tax returns can make home financing possible.
A bank statement loan is a mortgage that uses personal or business bank deposits to verify income instead of traditional tax returns. Lenders review your average monthly deposits over a set period to estimate qualifying income.
These loans are ideal for self employed borrowers, business owners, freelancers, and 1099 contractors whose true cash flow is higher than what shows on their tax returns after write offs.
Most programs require 12 to 24 months of bank statements, either personal, business, or a combination. The lender averages deposits over that period to determine qualifying income.
Many bank statement programs require down payments of around 10 percent to 20 percent or more, depending on credit, reserves, and the lender’s guidelines.
Credit requirements vary, but stronger credit typically leads to better rates and terms. Some programs may allow moderate credit scores with higher down payments.
Rates are often higher than conventional loans because of the alternative documentation, but many borrowers find the tradeoff worthwhile to qualify based on real income and buy sooner.
Yes. Many borrowers use a bank statement loan as a bridge and later refinance into a conventional or government loan once their tax returns or credit profile support traditional qualification.
