I made this video because a lot of self-employed borrowers think their only option is to qualify based on tax returns. That is not always the case.
Bank statement loans may give eligible business owners, 1099 earners, and entrepreneurs another way to document income when traditional tax-return income does not fit.
Quick Answer
A bank statement loan may allow eligible self-employed borrowers to use personal or business bank statements to help document income. These programs are commonly reviewed when a borrower has strong cash flow but does not qualify using traditional tax-return income.
What Is a Bank Statement Loan?
A bank statement loan is a mortgage option that may allow a self-employed borrower to qualify using bank deposit history instead of relying only on tax returns.
This does not mean there is no documentation. It means the documentation is different.
The lender may review personal bank statements, business bank statements, business ownership, deposits, expenses, reserves, credit, property type, and overall ability to repay.
Who Might Be a Good Fit?
A bank statement loan may be worth reviewing if you:
- Own a business
- Receive 1099 income
- Have strong deposits
- Have business write-offs that reduce taxable income
- Do not qualify using traditional tax-return income
- Are buying or refinancing a primary home, second home, or investment property
- Need an alternative documentation option
Why Tax Returns May Not Tell the Whole Story
Many business owners take legitimate deductions to reduce taxable income. That may be good for tax planning, but it can make mortgage qualifying more complicated.
A borrower may have strong monthly deposits and still show lower taxable income on paper.
That is where a bank statement loan may be worth reviewing.
What Documents May Be Needed?
Depending on the program, documentation may include:
- Personal bank statements
- Business bank statements
- Business license
- Proof of self-employment
- CPA or tax preparer letter
- Profit and loss statement
- Asset statements
- Credit authorization
- Purchase contract or current mortgage statement
- Insurance information
- Additional investor-required documents
Important Things to Know
Bank statement loans are not the same as conventional loans. They may have different requirements for credit score, down payment, reserves, rates, fees, and documentation.
They also still require underwriting approval. Lenders generally must review whether the borrower can repay the mortgage based on documented information.
The goal is not just to qualify. The goal is to make sure the loan makes sense.
Frequently Asked Questions
Are bank statement loans only for self-employed borrowers?
They are generally designed for self-employed borrowers, business owners, 1099 earners, and borrowers with non-traditional income documentation.
Can business bank statements be used?
Some programs may allow business bank statements, personal bank statements, or a combination of documentation. The right approach depends on the borrower and program.
Are bank statement loans considered Non-QM?
Many bank statement loans are considered Non-QM because they do not follow standard agency income documentation guidelines.
Is a bank statement loan a no-income loan?
No. Bank statement loans still require documentation, underwriting, and approval.
What This Means If You Are Buying or Refinancing in Southwest Florida
If you are self-employed in Fort Myers, Cape Coral, Naples, Lehigh Acres, Punta Gorda, Port Charlotte, North Port, or anywhere in Southwest Florida, a bank statement loan may be worth reviewing before you assume you cannot qualify.
Call or text Tim Hart: 239-910-5668
Tim Hart | VanDyk Mortgage Fort Myers | NMLS# 354676