Bank Statement Loan

Bank statement loans calculate qualifying income directly from your deposits over a 12 or 24 month period. For personal bank statements, lenders typically count 100% of qualifying deposits. For business bank statements, lenders apply an expense factor, usually counting 50% to 75% of deposits as qualifying income to account for business expenses. The exact factor depends on your industry, profession, and the lender's program. Some lenders allow you to provide a CPA letter or expense statement to use a higher percentage if your actual expenses are lower. Consistent monthly deposits produce the best result; large one-time deposits may be excluded or averaged in differently.

The right answer depends on how you run your business. If most of your revenue passes through personal accounts before being spent, personal bank statements often produce higher qualifying income because they're counted at or near 100%. If you maintain a clean separation between business and personal finances, business bank statements work well, especially when you can document a low expense ratio. We often look at both options and use whichever produces the strongest qualifying income. The accounts must be in your name (personal) or your business's name (business), and we need 12 to 24 consecutive months without significant gaps.

Most bank statement programs require a minimum credit score of 620 to 660, with the best rates and terms available at 720 and above. Lower scores are sometimes accepted with compensating factors like a larger down payment (25% or more), significant cash reserves, or a longer business history. Credit scores affect three things on a bank statement loan: whether you qualify, what your rate looks like, and how much you can borrow as a percentage of the property value. Borrowers above 740 with two years of clean statements typically see rates within 0.75% of conventional, while borrowers near the minimum see rates 1.5% to 2% higher.

Yes. Bank statement loans work for rate-and-term refinances, cash-out refinances, and debt consolidation refinances. This is particularly useful for self-employed borrowers who took out their original mortgage as a W-2 employee, then transitioned to self-employment and now can't refinance through conventional channels. It's also useful for cash-out refinances when you want to pull equity for business investment, debt payoff, or another property purchase. Maximum loan-to-value ratios are typically 80% for rate-and-term refinances and 75% for cash-out refinances, though these vary by program and credit profile.

Most bank statement loans close in 21 to 35 days, similar to a conventional mortgage. The income verification step requires more analysis than a W-2 review since underwriters calculate deposits across 12 to 24 months of statements, but technology has streamlined the process significantly. Having statements ready in PDF form directly from your bank, a clean profile without large unexplained deposits, and responsive communication with your loan officer all help you close on the faster end of the range. Cash-out refinances and complex business structures with multiple LLCs or holding companies typically push closing to the longer end.