Bank Statement Loans

Bank Statement Loans - All You Need to Know

What are Bank Statement Loans?

A bank statement loan is a type of mortgage designed specifically for people with non-traditional income sources, like self-employed individuals or those who don't receive pay stubs or W-2s. Instead of relying on tax returns or traditional proof of income, lenders review your bank statements from the past 12-24 months to calculate your average income. For those seeking interest only mortgages, bank statement loans can also be an attractive option.

This type of loan is ideal for:

Freelancers
Independent contractors
Business owners
Gig economy workers like Uber drivers or freelance writers
Entrepreneurs
Sole proprietors
Consultants

With a bank statement mortgage, your regular cash flow matters more than whether you have a conventional salary.

Who Qualifies for a Bank Statement Loan?

If you're self-employed or an entrepreneur, you could qualify for a bank statement loan if you meet the following criteria:

You’ve been self-employed for at least two years.
You earn the majority of your income from freelance work, contract jobs, or a business you own.
You have 12-24 months of bank statements that show consistent income.

Bank statement mortgages are perfect for individuals who might have trouble qualifying for a traditional loan due to business deductions or irregular income patterns but still bring in enough money to make mortgage payments.

Why Choose a Bank Statement Loan?

For many self-employed individuals and entrepreneurs, a bank statement mortgage can be the key to homeownership. Instead of relying on pay stubs, tax returns, or W-2s, this loan option focuses on your actual cash flow, making it a great choice for those with non-traditional income. If you’re a freelancer, small business owner, or gig worker, a bank statement loan might be your best bet for securing a home loan.

Ready to Get Started?

If you're a self-employed individual looking for a home loan, bank statement mortgages offer a flexible way to qualify based on your true income. Want to learn more or find out if a bank statement loan is right for you? Contact us today, and we’ll guide you through the process!

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What Do You Need to Qualify?

Bank Statements

Good Credit Score

12-24 months of personal or business bank statements – Lenders will use these to calculate your average monthly income.

Good Credit Score

Score of 620 or higher is typically required, though a higher score can help you secure better terms and interest rates.

Down Payment

Good Credit Score

Proof of Business

Most lenders require 10-20% down of the home’s purchase price.

Proof of Business

Debt-to-income Ratio (DTI)

Proof of Business

You’ll need to provide documentation showing you’ve been running a business for at least two years (e.g., a business license or LLC paperwork).

Debt-to-income Ratio (DTI)

Lenders often prefer a DTI ratio of 43% or lower, but some flexibility exists depending on the lender.

How a Bank Statement Loan Helped Sarah, a Freelance Graphic Designer:

Let’s say Sarah is a freelance graphic designer who has been self-employed for the past five years. She doesn’t get regular paychecks, but her income flows in steadily from client projects throughout the year. Sarah wants to buy a home, but because her tax returns show low income due to business deductions, she struggles to qualify for a traditional mortgage.

Instead, Sarah applies for a bank statement mortgage. Here’s what she provides:

12 months of bank statements showing her average monthly income from clients.
A credit score of 680, which qualifies her for a good interest rate.
A down payment of 15% on a $400,000 home, meaning she needs $60,000 upfront.
Proof of her freelance business, including a business license and contracts with her clients.

The lender uses Sarah’s bank statements to calculate her income and finds she qualifies for the loan. Thanks to the bank statement loan, Sarah is able to purchase her dream home without the hassle of traditional income documentation!

Bank Statement Loans