Key Takeaways
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Submit 12 or 24 consecutive months of statements from one account. Include every statement and every page.
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When reviewing a business account, lenders typically treat 50% of deposits as business expenses and count the remaining 50% as qualifying income.
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Deposits into a personal account may count as income in full if the borrower pays themselves from a separate business account.
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Minimum credit scores generally range from 620 to 660. A score of 680 may qualify for better pricing, while the highest LTV options usually require 700 to 720.
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Plan for a 10%–20% down payment, enough reserves to cover 3–6 months of PITI, and a DTI of approximately 50% or less.
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Most programs require two years of self-employment. Some accept one year if the borrower previously spent at least two years working in the same industry.
Bank statement loan requirements cover more than credit score and the bank statement loan down payment. Lenders also review your statement history and determine how much of your deposits remain after business expenses. That income calculation can decide whether you qualify and how much you can borrow.
Bank statement loan requirements
| Qualification item | Typical 2026 standard | What can strengthen the file |
|---|---|---|
| Bank statements | One bank account covering 12 or 24 continuous months, without omitted periods | 24-month history if income fluctuates or is seasonal |
| Expense factor (business accounts) | 50% of deposits counted | A CPA or tax-preparer letter may support a lower expense factor between 10% and 30% |
| Expense factor (personal accounts) | 100% of deposits counted | The business must operate through a truly separate account |
| Credit score | 620-660 minimum | Pricing generally improves at 680+; scores of 700–720+ may unlock programs at 90% LTV |
| Down payment / LTV | 10%–20% down payment, which is 80%–90% LTV | Putting down at least 20% may lower the rate and reserve requirement |
| Debt-to-income | Limit commonly set at about 50% | A DTI below 43% can expand your choice of lenders |
| Cash reserves | 3–6 months of PITIA after closing | Programs may ask for 6–12 months when credit is weaker or LTV is high |
| Self-employment history | 2 years | One year may be acceptable with at least two preceding years in the same line of work |
| Ownership stake | 25%–50% minimum, depending on the program | Greater ownership in the business may simplify qualification using business statements |
| Income documents | Bank statements instead of traditional income documents | An optional P&L or CPA letter may justify a more favorable expense factor |
How lenders turn deposits into income
Qualification depends on more than the amount sitting in an account. The lender first determines which deposits are eligible, then reduces business deposits by an assumed operating-cost percentage. As a result, two applicants with the same bank balance may be credited with very different monthly incomes. A higher calculated income can also improve pricing by bringing debt-to-income (DTI) down; see pricing tiers in the July 2026 bank statement loan rates.
The calculation: (total deposits − excluded deposits) × (1 − expense factor) ÷ number of months
Calculate your qualifying income with the same formula.
Business-statement calculation in practice
Assume a borrower provides 24 months of business-account records showing $520,000 in total deposits. Of that amount, $40,000 came from the borrower’s own personal account, so the lender removes it as an internal transfer.
| Calculation stage | Amount |
|---|---|
| Total deposits recorded during the 24-month period | $520,000 |
| Exclude transfers made from the borrower’s own accounts | −$40,000 |
| Remaining eligible deposits | $480,000 |
| Deduct the standard 50% allowance for business expenses | −$240,000 |
| Income remaining after the expense adjustment | $240,000 |
| Average qualifying income across 24 months | $10,000 per month |
The same file with a CPA letter
Now assume the accountant verifies that operating expenses consume 25% of revenue rather than the standard 50%. The deposit history remains exactly the same; only the supported expense percentage changes.
| Comparison | Default 50% factor | 25% CPA-verified factor |
|---|---|---|
| Monthly qualifying income | $10,000 | $15,000 |
| Housing payment permitted at 50% DTI after accounting for $800 in other monthly debt | $4,200 | $6,700 |
| Estimated loan limit using a 6.75%, 30-year fixed mortgage | About $540,000 | About $861,000 |
| Increase in buying power | , | About $321,000 |
In this example, a CPA letter supports a lower operating expense factor, allowing more of the deposits to count as income. This can increase the borrower’s purchasing power more than saving for a larger down payment for another year would, without requiring substantially more cash at closing. Confirm the policy with any lender you speak to. Find out whether the program permits a CPA-supported expense ratio and what information the accountant must provide.
Assumptions behind these figures
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The estimates use a 50% DTI ceiling, $800 in monthly obligations outside the proposed mortgage, a 6.75% rate on a 30-year fixed term, a 10% down payment (90% LTV), annual property taxes equal to 1.1% of the home’s value, and annual insurance equal to 0.30% of its value.
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The examples exclude mortgage insurance and HOA dues. They are for illustration, not an offer or commitment to provide financing. Lender policy, industry, pricing, and DTI and expense-factor limits can change the outcome.
Which deposits do not count?
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Transfers that would count the same income twice. Eligible draws from a separate business account may still qualify under a personal-statement program; the lender must confirm the treatment.
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Government-issued payments and income-tax refunds.
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Nonrecurring receipts such as gifts, proceeds from selling an asset, or insurance payouts.
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Unusually large deposits that cannot be traced to a documented source.
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Cash deposits, depending on the lender. Another lender may accept them only up to a specified portion of all deposits.
Excluded deposits do not count toward qualifying income. With 24 months of statements and a 50% expense factor, excluding $40,000 reduces qualifying income by about $833 per month ($40,000 × 50% ÷ 24).
Credit, down payment and reserves
Lenders consider your credit, down payment, and remaining assets together when assessing the strength of your application.
Credit score
Minimum credit scores generally range from 620 to 660, but a higher score can improve your options. A score of 680 may qualify for better rates, while putting 10% down at 90% LTV typically requires a score of 700 to 720. Because published minimums are not always consistent, confirm the requirement directly with each lender.
Down payment
Some borrowers with strong credit may qualify with 10% down, but 20% is a more practical planning figure. Second homes and investment properties typically require 20% to 25%. See the bank statement loan down payment and LTV requirements for a full breakdown, including how mortgage insurance may apply when you put down less than 20%.
Reserves
One of the trade-offs of a bank statement loan vs. a conventional loan is higher reserve requirements. After closing, borrowers typically need enough assets left to cover 3 to 6 full monthly mortgage payments, separate from the funds used for the down payment. Lower credit or a higher LTV may increase the requirement to 6 to 12 months. Some lenders count only 60% to 70% of eligible retirement or brokerage assets.
Documents a lender may request
For covered consumer mortgages, federal ability-to-repay rules require lenders to verify the income or assets they use in their decision through reasonably reliable third-party records. Bank statements qualify as financial institution records under that rule.
To track what you have gathered, use the printable document checklist.
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Bank statements: Submit every page for either 12 or 24 consecutive months from a single account. Our guide to how many months of bank statements you need explains when lenders request 12 months instead of 24 and how the timeframe can affect qualifying income. Your most recent statement typically must be dated within 60 to 90 days of closing.
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Proof the business exists: This may include formation documents, a business license, a CPA letter, or a business website or listing the lender can verify.
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A CPA or tax-preparer letter: This is not always required, but it may help support a lower expense factor. Ask the lender what the CPA letter must include before requesting one.
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A profit and loss statement: The lender may use a P&L statement to compare your reported business activity with your deposits. It generally does not replace bank statements as the primary income documentation.
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Personal identification and credit authorization: You will typically need a government-issued photo ID and permission for the lender to obtain a credit report from all three major bureaus.
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Property documents: Depending on the transaction, you may need a signed purchase agreement, a homeowners insurance estimate, and any applicable HOA documents.
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What you will not provide: Bank statement loans usually do not use W-2s, pay stubs, federal tax returns, or written employment verification to calculate income. For example, a sole proprietor ordinarily reports business income or loss on Schedule C, but the lender instead calculates qualifying income from eligible bank deposits.
What lenders look for in the statements themselves
Lenders look beyond your total deposits. Underwriters also examine transaction history, and the following issues can delay the process or reduce the amount they recognize.
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Overdrafts and returned items: Frequent overdrafts or insufficient-funds transactions may raise concerns about the stability of the business’s cash flow.
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Unexplained large deposits: Deposits that are much larger than usual must be documented. If the source cannot be verified, the lender may exclude them from the income calculation.
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Large changes month to month: Uneven revenue may lead the lender to request more history or take a more cautious approach to averaging your income. In some cases, 24 months of statements provide a clearer picture.
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Missing statements or pages: Your statements must cover every month without gaps and include every page, even pages marked “intentionally left blank.”
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Altered statements: Never change a statement before submitting it. Doing so is mortgage fraud, and the lender will verify the account information again before funding. If a statement contains an error, provide a written explanation instead.
Review our bank statement loan pros and cons guide to decide whether this financing option fits your situation.
Frequently Asked Questions
What are the requirements for a bank statement loan?
Typical bank statement loan requirements include bank statements from one account covering 12 or 24 months without gaps, a minimum score between 620 and 660, a 10% to 20% down payment, enough reserves for 3 to 6 monthly PITIA payments, approximately two years in self-employment, and DTI below about 50%. With bank statement loans, borrowers do not qualify with W-2s, pay stubs, or tax filings. If you’re using a business bank account to qualify, the lender commonly deducts a 50% expense factor before converting deposits into income.
What credit score do you need for a bank statement loan?
Published minimums across lenders range from 620 to 660. A score of at least 680 can unlock meaningfully better pricing. Bank statement loan programs offering 90% LTV with 10% down generally look for 700 to 720 or higher. A score near the program minimum will usually require a larger down payment.
How do lenders calculate income on a bank statement loan?
Lenders total your eligible deposits and divide that amount by the 12- or 24-month review period. They exclude transfers, government refunds, and deposits that cannot be verified. For business accounts, they also apply an expense factor, usually 50%.
Business-account formula: Eligible deposits × (1 − expense factor) ÷ number of months = monthly qualifying income.
For example: $480,000 × (1 − 50%) ÷ 24 = $10,000 per month.
Eligible personal-account deposits generally count in full.
What is the expense factor on a bank statement loan?
The expense factor is the share of your business deposits the lender treats as operating costs instead of income. Most lenders start with a 50% factor, meaning they count half of eligible deposits as qualifying income. Businesses with higher operating costs, such as restaurants, may receive a 70% factor. Some lenders accept a CPA or tax-preparer letter showing lower actual expenses, which may reduce the factor to 10% to 30% and allow more deposits to count as income.
Do bank statement loans require tax returns?
No. For bank statement loans, income is established through deposit activity instead of tax returns. The lender will also confirm that the company operates and may use a P&L to check whether the statement history is consistent with the business’s reported activity. Borrowers must still verify their identity, agree to a credit inquiry, and document the assets covering both the down payment and required reserves.
Can I use both personal and business bank statements?
Usually, no. You generally qualify using either personal statements or business statements because lenders calculate income from each type differently. Eligible personal deposits may count in full, while business deposits are reduced by an expense factor.
A lender may review both account types at the start to see which program gives you a stronger result. Choose the program before underwriting begins, since changing it later can delay the loan.
How many months of self-employment do I need?
Most bank statement loan programs require two years of self-employment. Some lenders accept one year if you can document at least two previous years of work in the same industry, for example, a salaried designer who becomes self-employed. With less than one year of self-employment and no related work history, your lender options may be limited.