Why agents care
Self-employed buyers are often told they don't qualify because deductions reduce their taxable income. Knowing this alternative exists keeps them in the market.
Glossary term
Bank statement loan
A bank statement loan is a non-qualified mortgage that estimates a self-employed borrower's income from 12 or 24 months of bank deposits, after an expense factor, rather than from tax returns. Rates and down payment requirements are typically higher than conventional loans.
Example
Example: $20,000 average monthly deposits with a 40% expense factor gives about $12,000 qualifying monthly income.
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Questions by topic
Bank statement loan: common questions
Who offers bank statement loans?
Non-QM lenders and some banks. Programs and terms vary widely.
Are bank statement loans riskier?
They usually cost more, and buyers should compare options with a lender.
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