Mortgage glossary
Bank statement loan
Definition: A bank statement loan is a non-QM mortgage that qualifies self-employed borrowers using deposits shown on personal or business bank statements instead of tax returns to document income.
Lenders review 12 or 24 months of statements, total the qualifying deposits, and apply an expense factor or use a CPA prepared profit and loss statement to arrive at monthly income. Tax returns, which often show lower income after write-offs, are typically not required.
This structure helps business owners, freelancers and 1099 earners whose tax returns understate their real cash flow. Expect larger down payment and reserve requirements than a conventional loan. We offer 12 or 24 month bank statement options, and our non-QM programs can work with as little as 1 year of self-employment.
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Reviewed by Kyle Richardson, NMLS #863464. General information, not advice for your specific situation. All glossary terms
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