Lenders calculate income by analyzing 12-24 months of bank statements and determining an average monthly deposit amount. For business bank statements, they typically apply an expense factor (usually 25-50%, depending on the industry) to account for business expenses. For personal bank statements, they may use 100% of deposits after removing transfers, loan proceeds, and other non-income deposits. Some lenders may also request a profit and loss statement prepared by the borrower or their accountant to support the bank statement analysis.

Yes, bank statement loans typically have interest rates 0.5% to 2% higher than conventional loans, along with higher origination fees (usually 1-2 points). This pricing reflects the additional risk lenders take by not using traditional income verification methods. However, for self-employed borrowers who maximize tax deductions, the ability to qualify for a larger loan amount often outweighs the slightly higher interest rate. As with any mortgage, shopping multiple lenders can help you find the most competitive terms.

Most bank statement loan programs require borrowers to be self-employed or business owners for a minimum of 1-2 years. Lenders want to see evidence of stable and ongoing business operations. Borrowers with 2+ years in the same line of work or industry typically qualify more easily and may receive better terms. Some lenders may consider a shorter self-employment history if you previously worked in the same industry as an employee and can demonstrate continuity of income.

Yes, many lenders offer both personal and business bank statement programs. Personal bank statement programs are typically used by sole proprietors who don't maintain separate business accounts, or by those who prefer to use their personal accounts for income verification. When using personal statements, lenders will exclude transfers from other accounts, identifiable loan proceeds, and any other deposits that don't represent income. Some lenders may require a higher number of personal bank statements (e.g., 24 months instead of 12) compared to business bank statements.

Bank statement loans can be used for various property types, including primary residences, second homes, and investment properties. Many programs also accommodate non-warrantable condominiums, townhomes, planned unit developments (PUDs), and 2-4 unit properties. Some lenders even offer bank statement loans for mixed-use properties where the residential portion constitutes at least 51% of the total area. However, the specific property types allowed and associated terms vary by lender, with investment properties typically requiring larger down payments and cash reserves.

Yes, bank statement loans can be used for both purchase and refinance transactions. Self-employed borrowers often use these programs to refinance existing mortgages, especially when they've been unable to qualify for conventional refinancing due to complex tax returns or write-offs. Bank statement refinances can be structured as rate-and-term refinances (to lower your rate or change your loan term) or as cash-out refinances (to access home equity). Cash-out refinances typically have stricter requirements, including higher credit score minimums and lower maximum loan-to-value ratios.