Could a bank statement loan fit me?
A bank statement loan uses bank records to help work out your income. It is one type of non-QM mortgage.
It may be worth a look if:
- Your business has grown since your last tax return.
- A slower year pulls down your two-year income average.
- Business write-offs reduce the income used for a standard loan.
- You earn steady income, but the usual records do not show it clearly.
Strong credit can help, but the lender still needs a way to verify enough income.
Are bank statement loans a good idea?
They can be worth a look when the income method fits and the payment works for you. Compare the rate, fees and cash needed with other options.
A standard loan may also work. Some tax-return deductions can be added back when income is calculated.
Can my stronger recent income help?
It may. A full recent year of bank statements can show a different picture from two years of tax returns.
Imagine your business had a quiet year, then grew. A lender that accepts 12 months of statements may review that recent full year. It will still check the source of the income and whether it can continue.
A few strong months do not always show a full year's earnings. Seasonal work and business costs still matter.
Do I need 12 or 24 months of statements?
The PennyMac bank statement programs used for our examples accept 12 or 24 complete, back-to-back months. The best period depends on the program and your records.
What about three or six months?
Those options need a closer look. A program may ask for a profit-and-loss report as well as recent statements. That report shows the business's sales and costs over a set period.
Tell Shahram what records you have. He can check which options may fit.
How much of my deposits will count?
There is no single percentage for every business.
The lender first removes money that does not count as business income. It then allows for business costs and your share of the business.
Here is a made-up example for an owner who owns the whole business:
| Step | Monthly amount |
|---|---|
| Average deposits the lender accepts | $20,000 |
| Business costs at an accepted 30% factor | −$6,000 |
| Income left for the loan review | $14,000 |
The 30% is the share set aside for costs. The remaining 70% counts in this example. Another business may need a different factor.
Staff, supplies, rent and the type of work can affect the method. If you own half the business, your share also matters.
Can personal bank statements work?
Yes, some programs use business income paid into a personal account. The lender must see where it came from and where business costs are paid. Business-account records may also be needed.
What about transfers between accounts?
Moving the same money twice does not create more income. A valid transfer of business earnings into your personal account may count under the right method. Savings transfers and borrowed money are different.
What credit score and down payment do I need?
Your credit score and down payment work together. A program's lowest score may need more cash down.
These are selected PennyMac A+ examples for a home you will live in. They assume a loan from $150,000 to $1 million and a home value that supports the price:
| Example mortgage credit score | Financing in this example | Down payment |
|---|---|---|
| 740 | Up to 90% | At least 10% |
| 700 | Up to 85% | At least 15% |
| 680 | Up to 80% | At least 20% |
| 660 | Up to 80% | At least 20% |
These examples still require a full review. Your property, credit history, debts and cash left after closing can change the result. Other lenders have different rules.
Will 20% down get me the best rate?
More money down can change the rate and reduce the amount borrowed. It also leaves you with less cash.
Compare the actual rate, APR, upfront fees, payment and cash left over. The smallest payment is not the only thing to weigh.
If these examples do not fit, ask Shahram about another option.
How much home can I afford?
Start with two numbers:
- The income the lender can accept.
- The monthly payment that fits your life.
The lender compares the new home payment and your other monthly debts with the income it accepts. This is called your debt-to-income ratio, or DTI.
Your own budget needs room for more than debt payments. Leave space for taxes, food, savings, business needs and a slow month.
Include property taxes, home insurance and any flood insurance or HOA dues in your housing budget. Plan for repairs and upkeep too.
Check my rate, payment & cash needed.
No contact details are needed for the online estimate. If you are unsure what income to enter, call or text Shahram first. If the tool does not cover your situation, he can help you review it.
How much cash do I need?
Your down payment is only one part.
| Cash to plan for | What it covers |
|---|---|
| Down payment | Your share of the purchase price |
| Closing costs and prepaid items | Loan and closing charges, plus items such as insurance, taxes and interest |
| Reserves | Eligible funds left after closing |
Reserves are your money, not another fee paid to the lender. The amount needed depends on the program and your full situation.
You may be able to use business funds, but the lender checks whether taking that cash out would harm the business.
The final cash due also depends on items such as your earnest-money deposit and any allowed credits. Use the rate tool for an estimate, then review the details with Shahram.
Can I add my spouse's income or use 1099 income?
Can my spouse's W-2 income help?
Yes, some programs allow a joint application with bank statement income for one borrower and wages for the other.
Each income source gets its own review. Your spouse's wages are not counted again as business deposits. Their debts and credit also matter.
What if I get a 1099 and do not own an LLC?
An LLC is not required just because you receive a 1099.
Tell Shahram what work you do, who pays you and what costs you have. A program that uses your 1099 forms may fit better than a bank statement program.
Being paid by one company can change which method is available. It does not mean there is no mortgage option to explore.
What if I have credit problems?
A past bankruptcy, foreclosure or late payment does not always end the search.
The lender looks at what happened, when it happened, and how you have paid your bills since then. Some programs require a longer wait or more money down.
A bankruptcy's filing date and discharge date are not the same. A foreclosure has its own dates too. Shahram can help you check which date and rules apply.
Review credit and other loan requirements, or call to discuss your situation.
What records and business history do I need?
Start with:
- Complete bank statements for the required period.
- Proof of your business history and ownership.
- A short description of the business and its costs.
- Records for your down payment and other funds.
- Details about the home, if you have found one.
The PennyMac examples use at least two years of business history and at least 25% ownership. Using 12 months of statements does not reduce that history requirement to one year.
A Sunbiz filing is one possible record. A business license, tax-preparer letter or other accepted records may help. A sole proprietor does not have to form an LLC just to ask about a loan.
A tax-preparer report is not required for every method. Check with Shahram before paying for extra paperwork.
Can I refinance or take cash out?
Bank statement options may also help a homeowner refinance or use part of the home's equity.
The review includes your income, home value, current loan balance and goal. Cash-out can have different limits from a purchase.
Bring your current payment, loan balance and the amount of cash you want, if any. Compare the new payment and loan costs before deciding.