A bank statement loan is a mortgage for which the underwriter uses the borrower’s bank statements to verify and evaluate income. Good candidates for bank statement loans include small business owners and self-employed individuals.

Bank statement loans are designed for borrowers who are not able to document their income using pay stubs, tax returns, and other income verification documents required for a qualified mortgage. The bank statements provided with the loan application must be consecutive and cover the 12 to 24 months immediately prior to the application.

Bank Statement Loan Requirements

Bank statement loans don’t need your tax returns, W-2s, pay stubs, or employment verification forms. Instead, you can use your personal bank accounts, or personal and business bank accounts, to prove your income and cash flow. 

You will still need to give your lender some of the normal paperwork as part of the loan process. In fact, you may have even more forms to fill out and documents to provide, because proving your income will be more complex than for a conventional loan.

• 12 to 24 months of personal or business bank statements;

• Two years’ history of self-employment;

• A credit score that is good, usually 680 and above;

• Enough cash or other liquid funds to cover several months of your mortgage;

• A leter from your accountant or tax preparer proving your business expense ratio.

Summary

Bank statement loans are a type of mortgage that lenders can issue based on personal information and bank statements rather than tax returns and employer verification. They can be a good option if you work for yourself, own a business, or don’t have a steady income. A bank statement loan may come with a higher interest rate and need a larger down payment.

Be sure to compare a bank statement loan offer with other loans you might be able to get. We can help you decide if this is the best fit for your situation, give me a call or text at 425-224-5794 if you have any questions.