Bank Statement Loan

The bank statement loan emerged as a solution to a real-world problem: self-employed Americans — business owners, freelancers, and contractors — frequently write off enough expenses to reduce their reported income below conventional qualifying thresholds. A borrower earning $200,000 in deposits annually might show only $80,000 on their tax return, making them ineligible for a conventional loan that requires two years of tax returns. A bank statement direct lender uses the deposit average as the income basis instead.

Underwriting methodology varies by direct lender. Most programs use either 100% of personal account deposits or 50% of business account deposits as qualifying income, after backing out obvious transfers and non-recurring deposits. Loan amounts up to $3 million are available from select direct lenders, and rates typically run 1%–2.5% above conventional rates to compensate for the additional underwriting risk. Down payment requirements usually start at 10%–20% depending on the loan amount and credit score.

Bank statement loans are offered almost exclusively by non-bank direct lenders and specialty mortgage companies. Large banks rarely touch this product due to the non-QM designation, which means the loans cannot be sold to Fannie Mae or Freddie Mac. Direct lenders in this space typically sell to private investors or securitize through private label channels, which is why borrower rates are higher. Top direct lenders in this space include Angel Oak Mortgage, Acra Lending, and various regional non-bank shops.