Lending
Bank Statement Loans in the Sacramento Region
Home loans for self-employed borrowers that show income with 12 or 24 months of bank statements instead of tax returns.
Talk to Maggie directly: cell (916) 549-3131 (text or call) · maggie@loveyoursurroundings.coMaggie B. Hopkins, NMLS #349517 · Surroundings NMLS #2528307
What is a bank statement loan?
A bank statement loan is a home loan where your income is shown with your bank statements instead of your tax returns. It's built for people who work for themselves. It is one kind of Non-QM loan, which means it doesn't follow the standard Qualified Mortgage rules.
Here's why it exists. When you own a business, your tax return shows your income after write-offs. Those write-offs can be smart tax planning. They can also make your income look much smaller on paper than the money that actually comes in. A bank statement loan looks at the deposits instead.
The lender still has to check that you can repay. The Consumer Financial Protection Bureau (CFPB) says on its page "What is a Qualified Mortgage?" (last reviewed January 2, 2025) that a lender must make a good-faith effort to determine that you can repay the loan. A bank statement loan is a different way of showing income, not a way around that check.
Who is a bank statement loan a good fit for?
It tends to fit you if you're self-employed and your deposits tell a clearer story than your tax return. That includes business owners, independent contractors, consultants, real estate agents and people who earn mostly from 1099 work.
It may also fit if your income has grown recently and your older tax returns don't show it yet. Or if your business has a lot of legitimate expenses that lower your taxable income.
It's usually not the first choice if your tax returns already show enough income. In that case a standard loan is often worth comparing first, because it generally costs less. More on that below.
What documents do you need for a bank statement loan?
Lenders set their own lists, and they differ. Most will ask for some version of these:
- Bank statements. Usually 12 or 24 months in a row, every page, for the account your business income goes into.
- Proof the business is real. Often a business license, a letter from your CPA or tax preparer, or a record showing how long you've been self-employed.
- Personal or business statements, depending on the program. Some programs use your personal account, some use your business account, and some look at both.
- Assets for the down payment and reserves. Statements showing the money you'll bring to closing and what's left after.
- Credit and identification. The same as any home loan.
Keep your statements clean while you're getting ready. Large deposits that aren't business income, like a transfer from a relative or money moved between your own accounts, may need a written explanation.
How does a lender figure your income from bank statements?
The lender adds up your deposits over the 12 or 24 months and works out a monthly average. Then it takes out anything that isn't income, such as transfers between your own accounts, loan proceeds or refunds.
What happens next depends on whose statements they are:
- Personal statements. If you pay yourself from the business into a personal account, the lender may count most of those deposits as income, because the business expenses were already paid before the money moved.
- Business statements. Business deposits include money you'll spend running the business. So the lender applies an expense factor, a percentage taken off the deposits to stand in for your costs. Some lenders use a set percentage for your type of business. Some will use a figure from your CPA or tax preparer instead.
The expense factor and the number of months can change your qualifying income a lot. That's one reason it pays to compare several lenders. The same statements can produce different results from one lender to the next.
What does a bank statement loan cost compared with a standard loan?
A bank statement loan generally costs more than a Qualified Mortgage for the same borrower and the same home. The rate is often higher, and the lender may want a larger down payment or more money in reserve. The lender is taking on more risk, so it prices the loan to match.
How much more depends on the lender, your credit, your down payment and the home. We compare several approved lenders and lay out the rate, the costs at closing and the monthly payment for each one. You'll get a Loan Estimate, the same federal form every lender uses for most home loans, so you can line them up side by side. You can test a monthly budget yourself with our mortgage calculator.
What are the trade-offs and risks?
- Higher cost. You may pay more over the life of the loan than you would with a standard loan.
- Features to read closely. Some Non-QM loans include features a Qualified Mortgage can't have, such as an interest-only period or a prepayment penalty. Ask about each one and get it in writing.
- Your statements tell the story. A few slow months or overdrafts can lower the average. Timing your application can matter.
- A plan to refinance later. Some borrowers use a bank statement loan now and plan to refinance into a standard loan once their tax returns show more income. That can work, but rates and rules may be different by then. Choose a loan you can live with even if you keep it.
What are the alternatives to a bank statement loan?
Start by asking whether a standard loan could work. Fannie Mae's Selling Guide (topic B3-3.5-01, dated December 13, 2023) generally looks for a two-year history of self-employment income, shown with signed tax returns. It allows one year of returns in limited cases, such as a business that has been running for five years. If your returns show enough income, a conventional loan is usually worth comparing first.
Other options to compare:
- Profit and loss loans, where a P&L statement shows your income, sometimes with fewer months of bank statements.
- DSCR loans, if you're buying a rental and would rather qualify on the rent than your income.
- Waiting a year until your next tax return shows the growth, if timing allows.
Give yourself options. We'll tell you which ones are open to you.
How do you start a bank statement loan?
Fill out the loan options form or call Maggie's cell at (916) 549-3131. Tell us what you do for work, how long you've been self-employed and what you're buying or refinancing.
Maggie B. Hopkins is a mortgage broker, so she shops bank statement programs across a network of approved lenders and shows you how each one reads your income. You're always free to use any lender you like. A first look usually needs your last 12 to 24 months of statements and your last two tax returns, so we can compare a bank statement loan with a standard one.
Frequently Asked Questions
How many months of bank statements do I need?
Most programs use 12 or 24 months in a row. The exact number depends on the lender and the program, and some lenders treat 12 and 24 months differently.
Can I use personal bank statements instead of business statements?
Often, yes. Some programs use personal statements, some use business statements and some use both. Business statements usually have an expense factor applied, because part of those deposits pays for running the business.
What is an expense factor?
It is a percentage a lender takes off your business deposits to stand in for your business costs. Lenders set it differently, and some will use a figure from your CPA or tax preparer instead.
Do bank statement loans cost more?
Generally, yes. They usually cost more than a comparable Qualified Mortgage because the lender takes on more risk. We compare several approved lenders and show you the costs in dollars.
Can I refinance out of a bank statement loan later?
Many borrowers do once their tax returns show enough income. Ask about any prepayment penalty before you sign, and choose a loan you would be comfortable keeping if rates change.
Talk to Maggie directly: cell (916) 549-3131 (text or call) · maggie@loveyoursurroundings.coMaggie B. Hopkins, NMLS #349517 · Surroundings NMLS #2528307
Loans are arranged through Maggie B. Hopkins, NMLS #349517 · Surroundings NMLS #2528307. This is not a commitment to lend. All loans subject to credit approval and property qualification. Equal Housing Lender.
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