What is a bank-statement loan?

It's a non-QM mortgage that qualifies you using the deposits in your bank statements — typically 12 to 24 months — instead of tax returns. It's designed for self-employed borrowers whose write-offs lower their reported income.

How many months of bank statements do I need?

Most programs review 12 or 24 months of statements. A longer history can give a fuller, more favorable picture of your income.

Do I need tax returns for a bank-statement loan?

No — that's the point. These loans use deposits rather than returns, though the lender may still ask for a business license or a CPA letter to confirm you're operating.

Are bank-statement loans more expensive?

Generally yes. Because they sit outside the conforming rules, they usually require a larger down payment, stronger credit, and carry higher costs than a standard loan.

Bank-Statement Loans Explained

A bank-statement loan is one of the most useful tools out there for self-employed buyers. Instead of asking for tax returns, it looks at the money actually flowing into your accounts. If your returns make you look 'poorer' than you are, this is often the loan that gets you home. Here's how it works.

By Jodie Barber, NMLS #76185 · 6 min read · Updated July 2026

Key takeaways

✦Bank-statement loans qualify you on deposits over 12–24 months instead of tax returns.
✦They're ideal for business owners and 1099 earners whose returns understate their income.
✦Business accounts usually get an expense factor; personal accounts may count deposits more directly.
✦Expect a larger down payment, stronger credit, and higher costs than a conforming loan.

What a bank-statement loan is

A bank-statement loan is a non-QM mortgage that qualifies you on your bank deposits rather than your tax-return net income. The lender reviews 12 to 24 months of statements, adds up the deposits that represent business income, and uses that to build your qualifying income.

It's called non-QM because it doesn't fit the Qualified Mortgage rulebook — not because it's risky. For a business owner with legitimate income and lots of write-offs, it can be the clearest picture of what you truly earn.

Who these loans are for

Bank-statement loans are built for people whose income is real but doesn't show up cleanly on a tax return. If that's you, this program may be a better fit than a conventional loan.

✦Small-business owners and sole proprietors with significant deductions.
✦1099 contractors, consultants, and gig workers.
✦Realtors, freelancers, and commission-based earners with variable income.
✦Business owners who reinvest heavily and show modest net income on paper.

How your deposits qualify you

The lender totals your qualifying deposits over the statement period and averages them into a monthly income figure. They filter out deposits that aren't business income — transfers between your own accounts, loans, or one-time windfalls — so the number reflects ongoing earnings.

If you use business accounts, the lender usually applies an expense factor, counting a percentage of deposits as income to account for the cost of running your business. A CPA letter stating your expense ratio can sometimes improve that factor. Personal-account programs may count deposits more directly.

The trade-offs to weigh

Bank-statement loans give you flexibility, but that flexibility comes with a cost. Because they sit outside the conforming world, they generally ask for more up front and price higher than a standard loan.

✦A larger down payment is common — often 10% to 20% or more.
✦A higher credit score is typically expected than on a conforming loan.
✦Costs and reserve requirements run higher than a Qualified Mortgage.
✦You'll need clean, consistent statements without a lot of unexplained large deposits.

How to prepare

A little housekeeping goes a long way. Keep your business and personal banking separate so your income is easy to document, and avoid moving large sums around in the months before you apply — unexplained deposits slow underwriting down.

Jodie will look at your statements first and tell you honestly whether a bank-statement loan or a traditional loan qualifies you for more. Sometimes the tax-return route still wins, and it's worth checking both.

Frequently asked questions

What is a bank-statement loan?: It's a non-QM mortgage that qualifies you using the deposits in your bank statements — typically 12 to 24 months — instead of tax returns. It's designed for self-employed borrowers whose write-offs lower their reported income.
How many months of bank statements do I need?: Most programs review 12 or 24 months of statements. A longer history can give a fuller, more favorable picture of your income.
Do I need tax returns for a bank-statement loan?: No — that's the point. These loans use deposits rather than returns, though the lender may still ask for a business license or a CPA letter to confirm you're operating.
Are bank-statement loans more expensive?: Generally yes. Because they sit outside the conforming rules, they usually require a larger down payment, stronger credit, and carry higher costs than a standard loan.

Keep reading

How Self-Employed Buyers Get a Mortgage

Self-employed? Here's how lenders calculate your income, the add-backs that raise it, the 2-year rule, and the loan options that qualify you in 2026.

What Credit Score Do You Need to Buy a House?

There's no single magic number. Here are the credit scores each loan program looks for in 2026 — FHA 580, conventional 620+, VA and USDA flexible — plus how to improve.