Bank Statement Loans for Business Owners

A bank statement loan is a mortgage that proves your income with 12 months of bank statements instead of tax returns. I add up the deposits that are real income and divide by 12 to get a monthly average. If the statements are from a business account, I then apply an expense factor. That number becomes your qualifying income, and it is often far higher than what your tax return shows. Everything else works like a normal mortgage: you still need good enough credit, a down payment and some savings left over after closing.

Twelve months. On the programs I use, 12 months of personal or business bank statements does the job, and I don’t ask my clients for more than that. Send every page of each statement, even the blank ones, because underwriters look for missing pages. The 12 months should be your most recent statements, in a row. If a new statement comes out while your loan is in process, I will ask for that one too.

Credit starts at 640 across the programs I can access, and your score sets your down payment. At 640 you typically need 20% down, at 660 it is 15%, and at 700 or higher you can put as little as 10% down. A higher score also tends to bring better pricing. If you are a few points from the next level, it can pay to wait a few weeks while you pay down a credit card. I will tell you if that is the case before you apply.

It depends on how your money moves. Business statements are counted after an expense factor, usually 50%, because your business has bills to pay. Personal statements can count in full, because the business has already paid its expenses before the money reaches you. The catch is that everyone named on the personal account has to be on the loan. I look at both and use whichever one gives you the stronger, cleaner file.

Usually, yes. A bank statement loan is a non-QM (non-traditional) loan, which means it proves your income outside the standard federal "qualified mortgage" rules. Because the lender takes on more risk, rates typically run 1% to 2% higher than rates on a traditional loan. For many owners that trade is worth it, because their write-offs save them more in taxes than the higher rate costs. Some clients also plan to refinance into a traditional loan later, once a few years of tax returns show more income.

Yes. Bank statement loans work for primary homes, second homes and investment properties. You can use them to buy, to refinance for a better rate or term, or to take cash out. If most of your income comes from rental properties instead of a business, a DSCR loan may fit better, because it qualifies you on the rent the property brings in.

Not on the programs I use. There is no monthly mortgage insurance on a bank statement loan, even when you put 10% down. That is a real advantage over many traditional loans, where putting less than 20% down usually adds a monthly mortgage insurance payment until you build up enough equity.

Two years in business is the normal starting point. You show it with a business license, your company papers or a letter from your tax preparer. If you have less than two years on your own but worked in the same field before, it is often workable. It helps when the rest of your file is strong, with good credit, healthy savings and a solid down payment. Tell me your story at the start, because how it is explained to the underwriter matters.