These loans are specifically designed for self-employed borrowers, business owners, and freelancers who have significant tax write-offs that lower their taxable income.

Lenders analyze personal or business bank statements (typically 12 to 24 months) to calculate the average monthly deposits. For business accounts, they apply an "expense factor" (often 50% for standard businesses) to estimate the qualifying income.

Lenders typically require 12 or 24 months of consecutive bank statements from the same account. A longer history can provide a more stable income picture, while a shorter period may be used if recent income has significantly increased.

 Lenders prefer stable cash flow, but they may average deposits over the given period to determine eligibility for those with seasonal or fluctuating income.

Yes. Because these are "non-QM" (non-qualified mortgage) loans with a higher perceived risk, interest rates are typically 1% to 3% higher than for conventional loans.

While some lenders may accept scores as low as 620, most prefer borrowers with good credit (700 or higher) for more favorable terms.

Bank statement loans often require a larger down payment than conventional loans, with a minimum of 10% to 20% being common. A larger down payment helps offset the risk for the lender.

Lenders may be more flexible, but a DTI ratio of up to 50% is generally the maximum for this type of loan.

Many bank statement loans do not have prepayment penalties, especially for owner-occupied or second homes.

No, that's the main purpose of this loan type. Income verification is based on bank statements, not traditional tax documents. Lenders may request a letter from a CPA to verify the expense ratio or business information.

 Major banks are less likely to offer these. Non-QM lenders, often found through mortgage brokers, specialize in bank statement loans.

Bank statement loans can typically be used for primary residences, second homes, and investment properties.

Yes, both rate-and-term and cash-out refinancing options are available through this program.

No, since lenders don't require tax returns for income verification, they do not require you to sign this form, which would authorize them to pull your tax transcripts.

Common reasons include insufficient time self-employed (typically less than two years), unstable or declining cash flow, excessive large undocumented deposits, or multiple overdrafts.

Yes, but some lenders offer specific 1099 income programs, which might provide a better income calculation and greater buying power for independent contractors than a bank statement loan.

Unlike conventional mortgages, many non-QM lenders offering bank statement loans have more flexible waiting periods for major credit events.