What Is a Bank Statement Loan?
A bank statement loan lets you qualify for a mortgage using your bank deposits instead of tax returns or W-2s. The lender looks at 12-24 months of your personal or business bank statements to figure out your income based on your regular deposits. This works great for self-employed people, business owners, or gig workers who make good money but can't prove it the traditional way because of write-offs or irregular income.
Who Is It Best For?
Bank statement loans are best for self-employed people, small business owners, freelancers, and gig workers who have steady money coming in but lots of tax write-offs that make their income look lower on paper. They're perfect if you've been in business at least 2 years, have good credit (usually 620+), and can put down 10-20% on a house.
Who Should Think About It Twice?
If you have a regular W-2 job with steady paychecks, you'll get better rates with a traditional mortgage. Bank statement loans cost more - expect rates 1-3% higher than normal loans. If your bank deposits are all over the place or you mix personal and business money in one account, it'll be hard to prove consistent income. And if you're new to self-employment (less than 2 years), most lenders won't approve you yet.
Pros and Cons
| Pros | Cons |
|---|---|
| No tax returns needed | Higher rates than traditional mortgages (1-3% more) |
| Use actual deposits, not taxable income | Need 10-20% down payment usually |
| Great for self-employed with write-offs | Must show 2 years of self-employment |
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