If you are self-employed or do not receive a traditional paycheck, qualifying for a mortgage can feel like an uphill battle. A Bank Statement Loan is a flexible option that uses your bank deposits to verify income instead of relying on tax returns or W-2s.
Lenders review 12 to 24 months of your bank statements to understand your real cash flow and ability to repay. This gives business owners, freelancers, and others whose tax returns do not reflect their full income a fairer path to home financing.
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This program is ideal for borrowers who do not fit the “standard” mold, including:
If your income is steady but not shown on a W-2, a Bank Statement Loan helps you qualify based on how you actually earn.
Bank Statements Instead of Tax Returns
You will typically provide 12 to 24 months of personal or business bank statements. Lenders review deposits to confirm steady cash flow and repayment ability.
Debt-to-Income Ratio (DTI)
Your DTI measures the percentage of your monthly income used to pay debts. For purchases and cash-out refinances, some lenders may allow a DTI as high as 55 percent.
Self-Employment History
Most programs require at least two years of self-employment. In some cases, one year may be accepted if you have prior experience in the same industry.
When you qualify using bank statements, lenders apply an expense factor to estimate your net income. This accounts for the fact that not every deposit is profit, since most businesses have operating costs such as rent, payroll, or supplies.
Typical Expense Factors
On average, lenders count about 50 percent of deposits as qualifying income, though this can vary.
Using a CPA Letter
If your actual expenses are lower, a CPA or accountant’s letter can verify your true expense ratio. This allows more of your deposits to be counted as income, potentially increasing how much you qualify for.
If you are self-employed, a freelancer, consultant, or gig worker, you know how tough it can be to qualify for a mortgage through traditional banks. That is why Bank Statement Loans were created. They give you a realistic way to qualify based on how you actually earn, not just what is shown on a tax return.
At SEI Mortgage, we understand the challenges entrepreneurs face. Whether you want to refinance and pull equity, purchase your next home, or expand your portfolio, we make the process simple, smooth, and built around your income.
Bank Statement Loans are designed to help self employed borrowers, freelancers, and investors qualify for a mortgage without relying on W-2s or tax returns. Below, we answer the most common questions about how these programs work, who they are best for, and what you need to qualify.
A Bank Statement Loan allows self employed borrowers and business owners to qualify for a mortgage using 12 to 24 months of bank deposits instead of tax returns or W-2s. This gives a more accurate picture of your true cash flow and repayment ability.
They’re ideal for small business owners, realtors, real estate investors, freelancers, gig workers, consultants, creatives, and retirees with investment income. If your tax returns don’t show your full earnings, these loans provide a fairer path to home financing.
You’ll typically need 12 to 24 months of personal or business bank statements, a steady deposit history, and at least two years of self employment (sometimes one year if you have prior experience in the same industry). Lenders may also review your debt-to-income ratio, with some allowing up to 55 percent.
Lenders apply an expense factor to your deposits to estimate net income. Low-overhead businesses like consultants or realtors often qualify with lower expense factors, while higher-overhead businesses like restaurants or trucking may have higher factors. A CPA letter can sometimes be used to verify lower actual expenses and increase qualifying income.
Traditional mortgages are built for W-2 employees with simple income structures. For self employed borrowers, they often don’t reflect true earnings due to write-offs and deductions. Bank Statement Loans look at real deposits, offering a flexible and realistic way to qualify for homeownership or refinancing.
Looking for a different solution? Explore our full range of Non-QM Loan Products to find the best fit for your strategy.
Whether you’re flipping a property, funding construction, or unlocking equity from your home, a Private Money Loan can provide the speed and flexibility you need.
