Twelve or twenty-four months of business or personal bank statements replace tax returns entirely. Built for owners, contractors, and 1099 earners whose returns are optimized for taxes rather than for mortgage underwriting.
Below: exactly how qualifying income is derived from deposits, which expense method usually wins, what disqualifies a statement, and a calculator that turns your deposit average into a realistic purchase price.
Ranges reflect common guidelines across the lenders we work with. They are not an offer, and your file may price inside or outside them.
A conventional lender reads your business's net income after every deduction — equipment, vehicles, home office, depreciation, retirement contributions — and treats that number as your income. Your accountant spent the year making that number as small as legally possible, because that is their job. The result is a borrower clearing $300,000 in deposits who documents $60,000 in qualifying income, and gets declined on a house they can comfortably afford.
A bank statement loan resolves that by looking at cash actually flowing into the business, then applying an expense factor to approximate real operating costs. Deposits, not deductions. The tax returns are never ordered, and no 4506-C transcript request goes to the IRS.
This is a full-documentation loan in every other respect. Credit is pulled, assets are sourced, the property is appraised, and the file is underwritten to an ability-to-repay standard — the deposits simply stand in for the income section. It is not a no-doc loan, and anyone describing it that way is describing a product that hasn't existed since 2008.
The cost is a rate above conventional, usually meaningfully so. The comparison worth running is not bank statement versus conventional in the abstract — it's the house you can buy now at this rate versus the house you could buy in two years after restructuring how you file. Sometimes waiting genuinely wins. We'll tell you when it does.
Underwriting totals eligible deposits across the statement period, divides by the number of months, multiplies by your ownership percentage, and then subtracts an expense factor. That last step is where the whole loan is won or lost.
The lender applies a flat factor — commonly 50%, sometimes 20–35% for low-overhead service businesses. Simplest path, no third party involved.
Your CPA or tax preparer states your actual expense ratio. If your true overhead is 20%, this can nearly double qualifying income versus a 50% default.
A prepared profit-and-loss statement, supported by two or three months of statements that corroborate it. Common for businesses with lumpy revenue.
Assumes a 45% debt-to-income ceiling, 20% down, and taxes and insurance at 1.55% of price annually. Your file's DTI limit, leverage, and escrow figures will differ.
Illustration only. Actual qualifying income depends on which deposits underwriting deems eligible and which expense method the lender approves. Not a quote or commitment to lend.
Assemble these before you shop and the file moves quickly. The statements themselves are the long pole — get all twenty-four months as lender-issued PDFs, not screenshots.
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If two years of returns show enough net income to carry the payment, take the conventional loan — it's cheaper and always will be. This program exists for the gap between what you earn and what your returns admit.
Most of these are fixable — but only before the statements are pulled, which is why the conversation should happen months ahead of an offer.
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Have three recent statements handy and we can tell you the real number on the call.
Talk it through →Whichever produces the higher average, and it isn't always obvious. If your business grew, twelve months captures the better period. If last year was uneven but the prior year was strong, twenty-four smooths it out. Twelve-month programs sometimes price slightly higher because the lender sees less history. Run both averages before choosing — we do this as a matter of course rather than defaulting to one.
Both are viable and they work differently. Business statements have an expense factor applied, because gross deposits aren't your income. Personal statements often don't — if what lands in your personal account is already your draw, some lenders count close to 100% of it. For an owner who pays themselves a consistent distribution, the personal-account route can qualify more income than the business route. Bring both and we'll model each.
Anything that isn't business revenue: transfers between your own accounts, loan proceeds, credit card advances, tax refunds, gifts, one-time asset sales, and refunded charges. Underwriters read every line of every statement and back these out. A borrower who moves money between three accounts monthly can see a deposit average cut by a third once transfers are removed — which looks like a surprise but is entirely predictable.
You can, though for a pure rental a DSCR loan is usually the better tool — it qualifies on the property's rent and leaves your business income out of the file entirely. Bank statement programs make more sense for a primary residence or a second home, where there's no rental income to underwrite against.
Meaningfully, and the spread moves with the market — which is why no honest broker posts a number on a webpage. It's driven by your credit tier, down payment, occupancy, and which lender's guidelines fit your deposit profile. What we can do is price your actual file against several bank statement lenders the same day and show you the spread in writing.
Yes, and many borrowers plan for exactly that. It requires two years of returns showing enough net income to qualify conventionally — which means deliberately filing with less aggressive deductions, a decision with a real tax cost. Talk to your CPA about whether the interest savings outweigh the additional tax before committing to that path. Check for a prepayment penalty on the bank statement loan first; on primary residences they're uncommon, but not unheard of.
Yes, and there may be a better version for you. Several lenders offer a 1099-only program that uses the forms themselves with a modest expense factor, skipping statement analysis altogether — often simpler and higher-qualifying for realtors, agents, consultants, and contract clinicians. If your income arrives as 1099s rather than through a business operating account, ask us to price both.
The calculator above turns your deposits into a realistic qualifying income and purchase price. When it looks right, apply through Edge Home Finance — or call and we'll review which expense method fits your file.