Key Takeaways
- A bank statement investment property loan uses eligible bank deposits to calculate your income, then checks whether that income supports your debts and the rental’s mortgage payment.
- The new property’s rent may help you qualify, but ask the lender how much it will count and what documents it needs. There is no rent-credit rule that applies to every bank statement loan.
- Plan for a down payment, closing costs, and money left after closing. A lender’s advertised minimum down payment may apply to a primary home or a different borrower profile.
- Compare a DSCR loan too. It qualifies primarily on the property’s rent, while a bank statement loan relies on your income. Some DSCR programs consider properties whose rent does not fully cover the payment.
A bank statement loan for an investment property lets a self-employed borrower buy or refinance a rental using eligible bank deposits to document income. It may help when business deductions leave too little income on a tax return to qualify for a conventional mortgage, even though the borrower’s deposits can support the monthly payment.
Not every lender offers bank statement loans for rentals, so check that investment properties are eligible for bank statement documentation before comparing terms. Then ask whether the lender will count rent from the property toward your qualifying income and what documents it requires. That answer can affect how much you’re able to borrow.
How does a bank statement loan work for an investment property?
An investment property is a home you intend to rent out rather than occupy as your primary residence. If you buy a house to use yourself as a vacation home, tell the lender that instead: a second home and a rental may have different financing rules. A property you intend to rent full-time should be described to the lender as an investment property.
With a bank statement loan, the lender uses a history of personal or business bank deposits to calculate your qualifying income. This can give a self-employed borrower a different way to document earnings than a program that relies primarily on tax returns. It is still an income-verified mortgage. The lender does not treat every dollar deposited as spendable income, and it still checks whether you can afford the new payment alongside your other obligations.
When you buy a rental with a bank statement loan, the lender uses your eligible deposits to calculate your income. It may also count some of the new property’s rent, depending on the program:
| Source | What the lender is trying to establish |
|---|---|
| Your business or personal deposits | How much qualifying income you have to support your debts and the proposed loan |
| Rent from the property you are buying | Whether, and to what extent, the rental income can offset the new property’s payment or add to qualifying income |
The lender’s program rules determine how it counts your deposits and rental income. If rent from a property you already own appears in your bank statements, the lender should avoid counting that income twice.
How does the lender calculate your income from bank statements?
Lenders commonly ask for 12 or 24 consecutive months of personal or business statements. They review where deposits came from, whether they recur, and whether they reflect business earnings. Transfers between your own accounts, loan proceeds, and other non-income deposits generally cannot be treated as earnings. A lender may ask for invoices or explanations of unusually large deposits.
If you use a business account, the lender generally accounts for operating expenses before arriving at qualifying income. Suppose a business averages $20,000 a month in eligible deposits and the program applies a 50% expense factor. For this illustration, it would count $10,000 a month as income. Another lender may use a different factor or permit documented actual expenses, producing a different result from the same statements. If you use a personal account, the lender will still need to identify which deposits represent usable income.
That is why an advertised loan maximum tells you little about your own approval. Ask a lender to show you its monthly qualifying income calculation before you assume your gross deposits will support the mortgage. Our bank statement loan requirements guide explains the documentation and other borrower checks in more detail.
Will the new rental property’s income help you qualify?
It may, but the lender needs an acceptable basis for the rent amount. An existing lease may help establish current rent. For a vacant purchase, a lender may ask for an appraiser’s estimate of market rent. It can also consider your history as a landlord and the property’s intended use. An advertised or hoped-for rent is not automatically the amount the lender will use. Ask which document it accepts and whether it will count rent before a tenant moves in.
Then ask how the rent enters the calculation. One approach credits an allowed portion of rent against the new property’s full monthly payment. That payment includes principal, interest, taxes, insurance, and any association dues, often shortened to PITIA. Any uncovered amount is then added to your other monthly debts. A program may instead apply a different rental-income calculation or decline to count projected rent.
For context, Fannie Mae’s conventional-loan rules use 75% of qualifying gross rent in certain rental-income calculations. A bank statement lender does not automatically follow that rule.
What difference can the rent make to your debt-to-income ratio?
Debt-to-income ratio (DTI) compares your required monthly debt payments with the monthly income a lender accepts. Consider this example purchase:
- Your monthly qualifying income from bank statements: $12,500.
- Your existing monthly debts, including the mortgage on your own home: $4,500.
- A $450,000 rental bought with 20% down: a $360,000 mortgage. At an illustrative 7.875% fixed rate for 30 years, principal and interest would be about $2,610 a month. Add $500 for estimated taxes and insurance, with no HOA dues, for monthly PITIA of about $3,110.
- Documented or appraised monthly rent: $2,700.
Here is how different illustrative treatments of the same $2,700 rent change the calculation:
| If the program credits… | Amount of the new payment left to cover | Illustrative DTI calculation | DTI |
|---|---|---|---|
| None of the rent | $3,110 | ($4,500 + $3,110) ÷ $12,500 | 60.9% |
| 75% of the rent ($2,025) | $1,085 | ($4,500 + $1,085) ÷ $12,500 | 44.7% |
| All of the rent ($2,700) | $410 | ($4,500 + $410) ÷ $12,500 | 39.3% |
In this example, how much rent the lender counts changes the DTI from 60.9% to 39.3%. Your lender may count rent differently or use a different DTI calculation. Ask it to run the numbers using your actual income, debts, proposed payment, and rental documents, then tell you whether the result meets its program requirements.
How the lender counts the rent for DTI doesn’t change the cash coming in: $2,700 in monthly rent is $410 less than the property’s $3,110 monthly payment. Vacancies, repairs, maintenance, management, and utilities could increase what you pay out of pocket. Qualifying for the mortgage does not make the property profitable.
What else do you need to qualify?
A down payment and closing funds
Investment property programs generally require you to bring more cash than an advertised low-down-payment primary-home offer. The amount depends on your credit, loan size, property and program. On a $450,000 purchase, 20% down is $90,000 and leaves a $360,000 loan. If the lender requires 25% down, the down payment rises to $112,500 and the loan falls to $337,500. A larger down payment can reduce the monthly payment, but it also ties up more of your cash. Closing costs come on top of the down payment. Our down payment guide explains how loan-to-value limits affect the amount needed.
Reserves after closing
Reserves are eligible funds you still have after paying the down payment and closing costs. Lenders often describe them as a number of months of PITIA. With a $3,110 payment, six months is $18,660. That amount is generally not paid to the lender; it demonstrates that you could keep making payments if the property is vacant or an expense comes up. Ask which accounts count and whether other financed properties increase the requirement.
Credit, debts, and the property
The lender checks your credit history, verifies existing loan payments, and evaluates the property’s condition and value through its appraisal process. A lower appraisal can reduce the loan available, leaving you to renegotiate the price, bring more cash, or reconsider the purchase. If you already own rentals, give the lender the full property list early. Each property’s income and payment need to be considered under its rules; there is no fixed number of rentals you can buy using bank statements.
LLC eligibility
If you want to buy the rental through an LLC, check whether the bank statement program allows the LLC to borrow, hold title, or both. Ask whether you’ll need to personally guarantee the loan. Confirm the lender’s rules before signing a purchase contract.
Rental income documentation
If you’re buying a short-term rental, ask what proof of rent the lender will accept. It may treat a lease, an appraiser’s rent estimate, and short-term booking projections differently when calculating your qualifying income.
Bank statement loan or DSCR loan: which fits the rental?
A DSCR loan is designed for investment properties. A bank statement loan can finance a rental too, if the lender offers an investment-property program. Here’s how each loan determines whether you qualify:
| Bank statement investment property loan | DSCR loan | |
|---|---|---|
| Main basis for qualification | Your eligible deposits and ability to carry the debts | The property’s eligible rent compared with its payment |
| Role of your personal DTI | Generally part of the decision | Typically not calculated from your personal income and debts |
| Role of the rental’s rent | May help, subject to the bank statement program’s documentation and calculation | Central to the property’s DSCR calculation, except in a no-ratio program |
| Possible fit | Your business income supports a property whose rent alone may be insufficient | The property qualifies on rent, or an eligible low-ratio or no-ratio program fits your situation |
At $2,700 in rent and $3,110 in monthly PITIA, this property has a DSCR of 0.87. A DSCR program requiring at least 1.00 would not work at those terms. However, a lender may offer a below-1.00 or no-ratio option; Griffin Funding, for example, offers both. Putting more down could also lower the payment and improve the ratio.
For this purchase, ask a bank statement lender to calculate your DTI using the rent it will actually accept. Ask a DSCR lender what it would offer at a 0.87 ratio and whether a larger down payment would change the terms. Then compare quotes using the same purchase price and loan term, including the cash needed, monthly payment, rate, points, reserves, and any prepayment penalty. If your tax returns support a conventional investment mortgage, include that option too. Our bank statement loan vs. DSCR loan guide covers the broader comparison between a bank statement loan and a DSCR loan.
How should you compare bank statement investment property lenders?
Start by confirming that the lender offers bank statement loans for investment properties in the state where you’re buying. Then ask whether the program accepts your property, loan amount, and ownership plans. Have the lender calculate your qualifying income and DTI using your deposits, existing debts, proposed payment, and the rent documentation it will accept.
Published terms can help you choose who to contact. Griffin Funding says eligible borrowers can buy an investment property with a bank statement loan for as little as 15% down. Ask what down payment it would require for your credit and property; the advertised minimum may not necessarily apply.
Angel Oak’s standard bank statement program also lists investment properties and has a $150,000 minimum loan amount. Its Business Bank Statement Elite program does not list rentals, so confirm which program a loan officer is quoting and how it would count the property’s rent.
When you receive written terms, compare the same loan amount and repayment term. Review the rate and points, monthly principal and interest, estimated taxes and insurance, all upfront fees, down payment, reserves, and any prepayment charge. Ask whether the rate is fixed or may adjust and whether an interest-only period will make later payments larger. A smaller initial payment is not necessarily a cheaper loan. Our bank statement loan rates guide can help you read the pricing.
Can you use a bank statement loan for investment properties to refinance a rental you already own?
Yes, if the lender permits investment-property refinances and you meet its rules. A rate-and-term refinance replaces the mortgage primarily to change its terms; a cash-out refinance takes a larger new loan and gives you the difference after paying off the old one and transaction costs. Bank statement income is still reviewed, and the lender may examine the property’s lease and rental history.
For a cash-out refinance, ask for the maximum loan-to-value ratio, often called LTV, for your property and profile. For example, if the property is worth $450,000 and the program allows 75% LTV, the maximum new loan would be $337,500. With a $250,000 current payoff, that leaves $87,500 before closing costs and other adjustments. A lender offering 80% LTV under an eligible program would allow a maximum new loan of $360,000, leaving $110,000 before closing costs and other adjustments. An advertised LTV is a maximum, not a guarantee. The limit for your loan depends on the lender’s program and your qualifications, and a low appraisal could lower the amount you can borrow.
Refinancing a rental you already own? Our bank statement refinance guide explains how lenders assess your income and what to compare before replacing your loan.
Next step:
- Gather the bank statements the lender requests and list your existing monthly debt payments.
- Get a realistic rent estimate and the proposed full monthly property payment, including taxes, insurance, and any HOA dues.
- Ask each lender how it counts that rent, what qualifying income it finds in your deposits, and what down payment and reserves you would need.
- If the rental may qualify on its own income, request a DSCR quote as well. Compare written offers for the same property and loan amount.
Compare bank statement loan lenders
Frequently Asked Questions
Can I buy a rental property with a bank statement loan?
Yes, if the lender’s bank statement program allows investment properties. It will calculate qualifying income from eligible deposits and review your debts, credit, cash, and property. Ask specifically for investment-property terms, since a lender’s primary-home minimum down payment may not apply.
Does the rent from the property I am buying count toward qualification?
It can, but the lender decides what documentation it accepts and how to calculate usable rent. Ask whether a lease or appraiser’s market-rent estimate is needed, whether projected rent is allowed, and exactly how the approved rent affects your DTI.
How much do I need to put down on a bank statement investment property loan?
There is no single down payment requirement that applies for all lenders and borrowers. It depends on the program, your credit, the property, and the loan amount. Ask for the investment-property maximum LTV, then budget separately for closing costs and required reserves.
Can I qualify if the rental’s rent is less than its mortgage payment?
Possibly. On a bank statement loan, your qualifying income may be enough to cover the new property’s uncovered payment and your other debts under the lender’s DTI rules. Some DSCR programs also consider rent below the payment. Either way, budget for the monthly shortfall and the rental’s other operating costs.
Can I close a bank statement investment loan in an LLC?
That depends on the lender and the particular loan program. Tell the lender you want LLC ownership before you apply, and ask who will be named as borrower and title holder and whether you must personally guarantee the loan. A lender’s DSCR LLC policy does not automatically extend to its bank statement program.
Is a bank statement loan better than a DSCR loan for an investment property?
The better choice depends on the income available to support the loan, the property’s rent, and each lender’s pricing and rules. Ask for both calculations if you might qualify either way, then compare the cash needed, monthly payment, and total costs.