A mortgage that looks at the money coming into your bank accounts instead of the income on your tax returns. Here is who it suits, how deposits are counted, and what to prepare.
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Fidelity Residential · NMLS #103098 · Equal Housing Lender
A bank statement loan is a mortgage for a self-employed borrower. Instead of tax returns, the lender looks at the deposits in your bank statements over one or two years of consecutive months and works out a monthly income from them.
It can help when your tax returns show less income than your business really brings in, for example after write-offs. Your credit, your housing payment history, the money for the down payment and savings, the appraisal and your debts compared with your income are all still checked.
These loans are not sold to Fannie Mae or Freddie Mac, so each program sets its own rules. For a home you live in, the lender must still make a good-faith decision that you can repay the loan.
Bank statement income is for the self-employed. If you are paid wages or live on savings, see the other documentation options.
The lender adds up the deposits, takes out anything that is not business income, and averages the rest by month. Personal and business statements are treated differently.
| Question | Personal statements | Business statements |
|---|---|---|
| Usually used when | Your business pays you into a personal account, kept separate from the business account | Your business income goes into a business account, or one account holds both personal and business money |
| What is counted | The eligible deposits, usually in full, after transfers, refunds and other deposits that are not business income are taken out | The eligible deposits, less an allowance for business expenses |
| The expense allowance | Not usually applied | A fixed share set by the program, a share based on the type and size of your business, or the share your CPA or licensed tax preparer states, never below the program’s floor |
| Your share of the business | Most programs also ask for a few recent business statements that show the transfers to you | The result is multiplied by your ownership share |
What the underwriter also checks. Whether deposits are rising or falling (a falling trend can mean the lower recent figure is used), any returned or overdrawn items, and whether the result fits the income on your application. A large deposit needs a short letter from you, and it must fit your business.
If bank statements are not the right fit, a loan officer can look at these instead.
For independent contractors and commission earners. The lender uses your 1099 forms instead of tax returns, takes off a standard allowance for work expenses, and averages the rest by month. Your earnings so far this year and the IRS record of your 1099s are checked.
For business owners whose CPA or licensed tax professional prepares and signs a profit and loss statement for the business. The net profit, averaged by month, is the income. A few recent business bank statements are usually requested too.
For borrowers with substantial savings and investments. You show verified assets instead of pay stubs or tax returns. Your accounts stay yours; the home is the collateral, as with any mortgage.
Asset-based loansSee every option side by side. Our alternative documentation page compares bank statements, 1099s, profit and loss statements, employer verification, assets and rental-income loans for investors.
How long you have been self-employed, what share of the business you own, and whether you keep separate business and personal accounts.
Complete monthly statements, every page, plus proof the business exists and is open, and a short description of what it does.
Deposits are totaled, non-business deposits taken out, the expense allowance applied where it fits, and the result averaged by month.
Credit, savings and the appraisal are reviewed as on any mortgage. You review your closing disclosure and sign.
Bank statements are not the only document. Most borrowers can start with these.
No. The bank statements take the place of tax returns for your income. If tax returns are in the file, the loan usually has to be reviewed as a full-documentation loan instead, so tell your loan officer which route you want.
Yes. The lender reviews complete statements, takes out deposits that are not business income, confirms the business is open shortly before closing, and checks your credit, savings and the home’s value.
It depends on how your money moves. If the business pays you into a separate personal account, personal statements are often simpler. If your income stays in a business account, business statements are used with an expense allowance. A loan officer can compare both for you.
Yes. Bank statement programs allow refinances, including cash-out refinances, within each program’s limits.
Many programs allow a second home, and some allow a rental property. A loan officer can tell you which programs fit the home you have in mind.
Programs set a waiting period after events such as a bankruptcy, foreclosure or short sale, and the period differs by program. Tell your loan officer the dates so the right program can be chosen.
Fidelity Residential is licensed in many states. The full, current list is on NMLS Consumer Access (opens in a new tab), or call us at 732-686-9999.
Get a quote, apply online, or talk it through with a licensed loan officer.
This page is general information, not a commitment to lend. Programs, terms and eligibility depend on credit, income, property and underwriting review and are subject to change without notice.