How to Qualify for a Bank Statement Loan in 2025: Complete Guide

What is a Bank Statement Loan?

A bank statement loan is a type of Non-QM (Non-Qualified Mortgage) that allows self-employed borrowers to qualify using bank deposits instead of traditional tax returns. This is ideal for business owners, freelancers, and entrepreneurs who write off significant expenses on their taxes.

Who Qualifies for Bank Statement Loans?

Bank statement loans are designed for:

• Self-employed individuals with 2+ years of business ownership
• Business owners who show lower income on tax returns due to write-offs
• Freelancers and contractors with variable income
• Gig economy workers with multiple income streams

Bank Statement Loan Requirements

Credit Score Requirements

Most lenders require a minimum credit score of 620-660 for bank statement loans. However, requirements vary:

Documentation Required

1. 12 or 24 months of bank statements (personal or business)
2. Business license or CPA letter confirming self-employment
3. Two years of self-employment history
4. Standard mortgage documents (ID, insurance, title)

Income Calculation Methods

Lenders calculate your qualifying income by:

1. Adding all deposits over 12 or 24 months
2. Subtracting non-recurring deposits (transfers, loans)
3. Applying an expense factor (typically 10-50%)
4. Dividing by 12 or 24 for monthly income

• Example: If your business deposits total $240,000 over 12 months with a 25% expense factor:
• Gross deposits: $240,000
• After expense factor: $180,000
• Monthly qualifying income: $15,000

How to Improve Your Chances of Approval

1. Maintain Consistent Deposits

Lenders want to see regular, consistent deposits. Avoid large gaps or erratic deposit patterns.

2. Separate Business and Personal Accounts

Keep business income in a dedicated business account. This makes income verification cleaner.

3. Document Large Deposits

Be prepared to explain any deposits over $5,000 that aren't from your business.

4. Improve Your Credit Score

Even a 20-point improvement can significantly impact your rate and LTV options.

Bank Statement Loan Rates

Bank statement loan rates are typically 0.5-1.5% higher than conventional loans due to the alternative documentation. Current rates range from:

• 7.25% - 8.50% for excellent credit (740+)
• 8.00% - 9.25% for good credit (700-739)
• 8.75% - 10.00% for fair credit (660-699)

*Rates as of January 2025. Actual rates depend on lender, LTV, and loan amount.*

Frequently Asked Questions

Can I use personal bank statements?

Yes, many lenders accept personal bank statements if business income is deposited there. However, business accounts are preferred.

What expense factor will lenders use?

Expense factors range from 10% to 50% depending on your industry. Service businesses typically get lower factors (10-25%), while product-based businesses may see 40-50%.

How long does approval take?

Bank statement loans typically close in 21-30 days, similar to conventional loans.

Can I refinance into a conventional loan later?

Yes, many borrowers use bank statement loans as a bridge and refinance into conventional loans once they can document income traditionally.

Get Your Free Bank Statement Loan Document Checklist

Gathering the right documents is crucial for a smooth application process. Download our comprehensive checklist that includes:

• Complete list of required documents
• Tips for organizing each document type
• Common mistakes to avoid
• Lender-specific requirements guide
• Printable checkbox format

This free resource has helped thousands of borrowers prepare their applications faster.

Next Steps

Ready to see if you qualify for a bank statement loan? Use our free matching tool to connect with lenders who specialize in self-employed borrowers.