What is the difference between a bank statement loan and a conventional loan?

Short answerA conventional loan qualifies you on tax returns, W-2s, and pay stubs under agency guidelines, while a bank statement loan is a non-QM product that uses 12 to 24 months of bank deposits to document income. Bank statement loans help self-employed borrowers whose tax returns understate real earnings, but they carry higher rates and larger down payments. If your tax returns fully support your income, conventional is usually cheaper.