A bank statement loan program is a non-qualified mortgage (non-QM) designed for self-employed individuals, freelancers, gig workers, or others with non-traditional income who may struggle to qualify for conventional loans due to inconsistent income or significant tax deductions. Instead of using tax returns, W-2s, or pay stubs, these loans verify income through personal or business bank statements, typically over 12 to 24 months.
Income Verification: Lenders analyze average monthly deposits to calculate income, often applying an expense factor (e.g., 30–50%) to determine qualifying income. Any erroneous or unexplained large deposits are removed from the calculation.
Eligibility:
- At least 2 years of self-employment or non-traditional income.
- Credit score typically 620–700+ (higher scores may secure better rates).
- Down payment of 10–20% (sometimes as low as 5% with certain lenders).
- Debt-to-income (DTI) ratio usually up to 50%.
Properties: Can be used for primary residences, second homes, or investment properties.
Documentation:
- 12–24 months of consecutive bank statements (personal or business).
- Proof of business existence (e.g., CPA letter or business license).
- No tax returns or W-2s required.
