Bank Statement Loans for Self-Employed Borrowers

Bank statement loans are specialized mortgage programs designed specifically for self-employed borrowers, independent contractors, freelancers, gig workers, and business owners who have difficulty qualifying for traditional mortgages due to tax write-offs and business deductions. Unlike conventional loans that require W-2s, paystubs, and tax returns showing high taxable income, bank statement loans allow you to qualify based on your actual cash flow as demonstrated through 12-24 months of personal or business bank statements.

This alternative income verification method is ideal for entrepreneurs and self-employed professionals who legitimately reduce their taxable income through business expenses, depreciation, and other legal tax strategies. While these deductions benefit you at tax time, they often make it impossible to qualify for a traditional mortgage because lenders see artificially low income on your tax returns. Bank statement loans solve this problem by analyzing your actual deposits and cash flow patterns, providing a more accurate picture of your true earning capacity and ability to repay a mortgage.

The underwriting process for bank statement loans involves a detailed analysis of your bank deposits over 12 or 24 months. Lenders apply an expense factor (typically 25-50% depending on whether you use personal or business accounts) to account for business costs, then calculate your qualifying income based on the net deposits. This method recognizes that your gross deposits represent your business revenue, and after accounting for reasonable business expenses, the remaining amount demonstrates your true income available for mortgage qualification.