Self-employed? A 90-day prep plan for a bank-statement loan
By Francisco Williams, CCIM · CCIM · Mortgage Loan Originator NMLS #1858674 · CA DRE #01979442 · Updated
Short answer
A bank-statement loan qualifies a self-employed borrower on deposits shown in 12 or 24 months of personal or business bank statements instead of tax-return income. The lender averages eligible deposits and, for business accounts, applies an expense factor. Clean, consistent statements make the biggest difference.
How income is estimated
Lenders total eligible deposits and exclude transfers between your own accounts, loan proceeds and one-off unusual deposits. They then average them. Business-account deposits are usually reduced by an expense ratio, which may be a standard factor or one supported by a CPA or tax preparer letter.
Prepare before you apply
Use one primary account for business income. Keep a short note explaining any large deposits. Have your business license or CPA letter showing how long you've been self-employed. Avoid overdrafts in the months before you apply.
- Day 90: Pick one business account for business income; stop routing personal spending through it.
- Day 90: Download 12 and 24 months of statements, every page.
- Day 75: List every deposit that isn't customer revenue (transfers, loans, refunds) with a one-line explanation.
- Day 60: Get a CPA or licensed tax preparer letter confirming the business and your ownership share, if the program asks.
- Day 45: Avoid large unexplained cash deposits; deposit early and document sources.
- Day 30: Gather the business license, entity documents and a P&L if requested.
- Day 0: Apply with the full statement set and your deposit list.
Program requirements vary; this is a preparation plan, not a guideline.
The 90-day plan
Most delays on bank-statement files come from unexplained deposits and mixed accounts. Start three months out.
Tradeoffs
These are non-QM programs. Pricing and down payment requirements differ from conventional loans. Compare with a full-documentation option if your returns support it.
Next step
See the loan programs overview and the requested documents list.
Frequently asked questions
How many months of bank statements are needed?
Usually 12 or 24 months, depending on the program.
Can I use business bank statements?
Often yes, with an expense factor applied to deposits.
Is a bank-statement loan a conventional loan?
No. It's a non-QM loan with its own guidelines and pricing.
Sources
HELOC or cash-out refinance? A blended-rate worksheet
How to compare adding a second lien with replacing your first mortgage: blended cost, closing costs and term.
Debt-to-income ratio: a worked example
How lenders calculate front-end and back-end DTI, which debts count, and a worked example you can redo with your own numbers.