The details
The math works like this: the lender totals your eligible deposits over 12 or 24 months, divides by the number of months, then applies an expense factor. A borrower depositing $40,000 a month with a 50 percent expense factor qualifies on $20,000 a month of income. That income then goes through the same debt-to-income calculation as any other loan.
Maximum loan amounts vary by lender and by your profile. At 620 to 680 credit, expect caps around $1 to $1.5 million. At 700 plus with 20 percent down, $2 to $3 million is common. Jumbo bank statement loans above $3 million exist but need strong reserves, usually 6 to 12 months of payments in the bank after closing.
To maximize your qualifying amount, keep business and personal deposits clean and consistent. Large, undocumented transfers get excluded. If your actual business expenses are well under 50 percent, get a CPA expense-ratio letter before you apply, it can raise your qualifying income substantially.
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Related loan programs
Bank Statement Loans
A bank statement loan is a non-QM mortgage that calculates self-employed income from 12 or 24 months of personal or business bank deposits instead of tax returns.
P&L-Only Loans
A P&L-only loan qualifies a self-employed borrower using a 12- or 24-month profit and loss statement prepared or signed by a CPA, EA or licensed tax preparer, with no tax returns.
1099 Loans
A 1099 loan qualifies independent contractors using their 1099 forms (and sometimes a small expense factor) instead of full tax returns, so write-offs on Schedule C do not shrink your qualifying income..
Frequently asked questions
How is income calculated on a bank statement loan?
The lender averages your deposits over 12 or 24 months, then subtracts an expense factor, typically 50 percent, unless a CPA letter documents lower expenses. Transfers between your own accounts are excluded.
Do I need 12 or 24 months of bank statements?
Both exist. Twelve-month programs are faster to document but sometimes price slightly higher. Twenty-four-month programs smooth out seasonal income. Your loan officer will recommend based on your deposit history.
Can I use business bank statements?
Yes. Most bank statement programs accept business statements, personal statements, or a mix. With business statements, the expense factor matters more, so a CPA letter helps.
What credit score do I need for a bank statement loan?
Most programs start at 620, with better pricing at 680 and above. Larger loan amounts typically require 700 plus and larger down payments.
Are bank statement loan rates higher?
Yes, typically 0.5 to 1.5 percentage points above conventional rates, because the lender takes on more income-verification risk. The gap narrows with higher credit scores and lower loan-to-value.
More answers
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