When tax returns don’t tell the whole story
If you’re self-employed, you already know the problem: your tax returns often show far less income than you actually earn. Deductions, write-offs, and business expenses are great for taxes—but not always great when applying for a mortgage.
That’s where bank statement loans come in.
These loans are designed specifically for entrepreneurs, business owners, and independent contractors whose real cash flow doesn’t match their taxable income.
What Is a Bank Statement Loan?
A bank statement loan is a mortgage that qualifies borrowers based on deposits shown in bank statements, rather than W-2s or tax returns.
Instead of analyzing net income after deductions, lenders review:
- Personal bank statements
- Business bank statements
- Consistent monthly deposits over time
This gives a more realistic picture of how much income you actually bring in.
How Income Is Calculated
While exact guidelines vary, most bank statement programs work like this:
- 12–24 months of bank statements are reviewed
- Monthly deposits are averaged
- A percentage is applied to account for expenses
- The resulting figure becomes your qualifying income
For business accounts, lenders may apply an expense factor (often 50% or lower depending on industry).
Who Benefits Most from Bank Statement Loans?
These loans are ideal for:
- Business owners
- Self-employed professionals
- Entrepreneurs
- Real estate investors
- Commission-based earners
- Gig economy workers
If your cash flow is strong but your tax returns look light, this option may be a perfect fit.
Pros and Cons to Consider
Pros
- No tax returns required
- Income reflects real cash flow
- Flexible underwriting
- Strong option for growing businesses
Cons
- Higher interest rates than traditional loans
- Larger down payment often required
- More documentation review upfront
Bank statement loans trade paperwork simplicity for flexibility—not risk.
How Affinity Home Lending Helps Self-Employed Buyers
We help borrowers:
Review deposits before applying
Choose personal vs. business statements strategically
Optimize expense factors
Compare bank statement loans vs. conventional options
Structure approvals smoothly and accurately
Self-employed income doesn’t have to slow you down—if it’s presented correctly.