Bank Statement Program

What it is

The tax code encourages self-employed people to deduct aggressively. Conventional mortgage underwriting then reads the resulting net income as your entire income. Bank statement loans exist to bridge that gap.

Instead of tax returns, underwriting analyzes 12 or 24 months of deposits and applies an expense factor to arrive at qualifying income. For many business owners that figure is considerably higher than the adjusted gross income on their return.

These are ordinary mortgages from licensed lenders, not hard money. Terms run up to 30 years and the loans amortize normally. What differs is how income is documented, and the pricing reflects that difference.

Who it fits

• Self-employed business owners with a two-year history
• 1099 contractors
• Freelancers, consultants, and gig workers
• Borrowers whose tax returns understate their cash flow

How it runs

1. 1Document DepositsProvide 12 or 24 months of statements. We calculate the qualifying income from them.
2. 2ApplyA standard application, with underwriting weight on credit and reserves.
3. 3UnderwriteManual underwriting reviews the deposits and the business itself.
4. 4CloseManually underwritten files generally take longer than an automated conventional loan.