What is a 12-month bank statement loan?

This mortgage approval is based on your income over the past 12 months, as verified by deposits in your personal and business accounts.

What is a 24-month bank statement loan?

If you have significant variations in your monthly income, such as working on a commission basis, you may be asked to provide 24 months of documentation rather than just 12 months. This gives lenders a more comprehensive overview of your typical income and whether you can afford the loan amount.

Can I use personal bank statements instead of business?

Yes, if you have sufficient income in your personal account, then you can qualify for a bank statement loan without using your business account. When using personal bank statements, borrowers may need to provide additional details, such as their 1099 forms. We’ll work with you to ensure that you have all the documentation necessary.

Is a CPA letter required to qualify?

While not always required for bank statement loans, a CPA letter may be requested if you are using business income to qualify. This is especially so if you work in a field that has traditionally higher expense factors, like restaurants. A CPA letter verifies your business operations and confirms that you have the stated income.

Can I get a bank statement loan with a 1099 income?

Yes, our bank statement loan lenders are happy to work with you if you have 1099 income.

What is the minimum FICO score needed?

The minimum credit score a mortgage lender will accept is usually 620. However, some lenders will want scores as high as 700, depending on other factors, like how much income you make in a month.

What is the maximum LTV for a bank statement loan?

The typical loan-to-value ratio is usually 80%, but some lenders may accept as high as 90%. This depends on your credit report, income, and the amount of your home loan.

Can I refinance using a bank statement loan?

Yes, you can refinance an existing mortgage with a bank statement loan. This may be a good option for self-employed borrowers and independent contractors who can no longer meet the income verification necessary for a refinance.

Can I use this loan for an investment property?

Yes, you can use bank statement loans for an investment property. However, you may find that other loan programs, like Debt Service Coverage Ratio (DSCR) loans are better suited for investing. Contact us to discuss which mortgage product is best suited to your needs.

Do I need to own 100% of the business to qualify?

In general, you need a minimum of 25% business ownership to qualify using your business bank statements. Some lenders may require a 50% ownership stake.

What industries commonly qualify for this loan?

Gig workers, freelancers, independent contractors, self-employed individuals, small business owners, and real estate investors often opt for bank statement loans because they typically do not have the income verification documents required for other types of loans, such as Federal Housing Administration (FHA) and VA loans.

What down payment is required?

These mortgages cannot be bundled and resold by Fannie Mae on the secondary mortgage market. This makes bank statement loans riskier for mortgage lenders, and so they typically require a larger down payment to protect their bottom line. You can expect to pay somewhere between 10% and 20% of the home’s purchase price.

Can I use a bank statement loan if I had a recent foreclosure?

Generally, you must wait 12-24 months after a foreclosure to secure a new mortgage loan. In addition to the waiting period, you may also face potentially higher interest rates due to lower credit scores.

How is my income calculated from deposits?

Your deposits will be averaged over the total period of statements, usually 12 to 24 months. If you are using business bank statements, the lender will apply a default expense factor, usually 50%, to account for operating expenses. Industries with traditionally higher expense factors may have a 70% factor applied.

What if I have large deposits that aren’t business income?

Non-business deposits may be seen as a red flag to lenders, so you may be required to provide additional documentation. In some cases, they will be disqualified from income calculations, as it’s assumed you will not use these irregular deposits for your mortgage payments.

Bank Statement Loans

Self-employed individuals can achieve their dream of homeownership through a bank statement mortgage loan. Unlike traditional mortgages, these loans don’t require tax returns, as approval is based on bank statements showing proof of income instead. If you’re a small business owner, independent contractor, or freelancer, our loan officers can help you find the right loan solution for your financial goals. Call us today to learn more about our bank statement mortgage programs.

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Table of content

What is a Bank Statement Loan?

Also known as a non-qualified mortgage (non-QM loan), bank statement loans work by reviewing your average monthly deposits in your bank accounts. This makes them a great home loan option for freelancers, business owners, and 1099 workers who may not receive W-2s, tax returns, or pay stubs.

Who Qualifies for a Bank Statement Loan?

By using their business or personal bank statements, borrowers from all walks of life can access a flexible home loan program. Bank statement programs are a great option for self-employed borrowers, including:

Business owners with at least 25% ownership
Freelancers
1099 earners
Real estate investors
Gig workers

If you’ve been turned down for a traditional loan due to inadequate documentation, you may be a perfect fit for a bank statement loan program.

Key Benefits of Our Bank Statement Loan Program

A bank statement loan program can be a fantastic way to achieve your dream of homeownership, even if you can’t qualify for a traditional loan. Benefits include:

No Tax Returns: Self-employed borrowers often have complicated tax situations, which make it difficult to qualify for other home loans. Bank statement loans do not require tax returns, making them easier to get approved.

Flexible Documentation: Unlike other loan options, personal and business bank statements are a valid form of income documentation for these loans.

Larger Loan Limits: Because these loans are non-qualified mortgages, they are not subject to conventional loan limits. The minimum loan amount usually starts at $100,000.

Additional Statement Options: You can qualify with 1099 forms or profit and loss statements for your business.

Multiple Loan Options: Like with other mortgages, you can access purchase, rate-and-term refinance, and cash-out refinance bank statement loans.

Use for Personal or Business Real Estate: Bank statement loans can be used to buy a primary residence, vacation home, or investment property.

Fast Approvals: Bank statement loans have less paperwork and a simpler qualification process, meaning that you can get approved in weeks instead of months.

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Do You Qualify? Bank Statement Loan Requirements

Our team will guide you through everything you need to qualify for a bank statement loan, including the following requirements.

Bank Statements: You will need at least 12 months of business or personal bank statements. Some lenders may require 24 months, particularly if you experience significant fluctuations in your monthly income.
Proof of Self-Employment: This can be in the form of a CPA letter or a business license. If you are a gig worker or independent contractor, you can provide 1099 forms for all your contracts.
Credit Score: Some lenders accept scores as low as 620, while others require a score of 700 or higher. The higher your score, the better rates you can access.
Ownership: You must have at least 25% business ownership, although some lenders may require 50% ownership. This can be proven through licenses or articles of incorporation.
Reserve Funds: Self-employed borrowers often have inconsistent income, so lenders will ask for 3 to 12 months of reserve funds to cover your mortgage and homeowner’s insurance.

Accepted Documentation Types

Self-employed individuals love bank statement loans because they can use a variety of documents, making this one of the most flexible loan types. Acceptable income verification documents include:

Business bank statements
Personal bank statements
1099 forms
Profit and loss statements

A CPA letter can improve your chances of being approved, as it serves as independent verification of your income. These are provided by licensed tax preparers, who verify your typical yearly income and length of business operations.

Eligible Property Types

Bank statement loans can be used for a variety of property types, including:

Owner-occupied homes
Single-family homes
Duplexes and multifamily units
Investment properties
Second homes
Condominiums
Townhouses
Non-warrantable units

Loan Terms & Limits

Our bank statement loans provide ample funding for your home ownership dreams. We offer the following terms:

$4 million maximum loan amount
Up to 90% loan-to-value ratio
Minimum 10% down payment
Fixed-rate and adjustable-rate loan options
30-year, 15-year, and interest-only options

Bank Statement Loan Application: Step-by-Step Process

Arnaiz Mortgage’s five-step loan process helps you get qualified faster, allowing you to quickly achieve your home ownership dreams.

Pre-Qualification: Provide basic details, including your typical income and credit score, to see how much you can borrow.

Submit Documentation: Provide up to 24 months of business or personal bank statements, as well as proof of other assets like savings and investment accounts. You can provide 1099 forms, CPA letters, and profit and loss statements. We will need a valid form of ID and a Social Security number.

Choose a Product: Select from fixed-rate, adjustable-rate, 15-year, 30-year, and interest-only options based on your financial goals.

Home Appraisal: A qualified appraiser will determine the home’s market value, allowing us to determine the amount of funding you can receive.

Close: We will thoroughly analyze your income, home value, and other documentation before you’re approved. Because bank statement mortgages have more flexible underwriting requirements, the process is often faster. On closing day, you’ll provide your closing costs and down payment, then receive the keys to your new home.

Why Choose Arnaiz Mortgage as Your Bank Statement Loan Lender

Self-employed borrowers and small business owners often worry that they’ll never be able to secure a home loan due to a lack of tax returns and other traditional income documentation. However, you can still achieve your homeownership dreams by allying with Arnaiz Mortgage.

Our bank statement loans are tailored to meet the unique needs of entrepreneurs, investors, and freelancers. We provide personalized service, ensuring that you find the perfect home loan product for your situation.

Thanks to our years of experience with non-qualified mortgages, we can offer fast approvals. We work closely with our clients to ensure they have all necessary documentation before submitting everything to the underwriting team. This means that you can get the keys to your new castle in weeks, not months.

Our flexible underwriting requirements allow us to accept multiple types of income verification, including CPA letters and business bank statements, as well as 1099 forms and personal bank statements.

With Arnaiz Mortgage, you’ll receive personalized support throughout the life of your loan. We can assist you with bank statement refinances, including rate-and-term refinances and cash-out refinances.

Frequently asked questions about Bank Statement Mortgage Loans

What is a 12-month bank statement loan?
This mortgage approval is based on your income over the past 12 months, as verified by deposits in your personal and business accounts.
What is a 24-month bank statement loan?
If you have significant variations in your monthly income, such as working on a commission basis, you may be asked to provide 24 months of documentation rather than just 12 months. This gives lenders a more comprehensive overview of your typical income and whether you can afford the loan amount.
Can I use personal bank statements instead of business?
Yes, if you have sufficient income in your personal account, then you can qualify for a bank statement loan without using your business account. When using personal bank statements, borrowers may need to provide additional details, such as their 1099 forms. We’ll work with you to ensure that you have all the documentation necessary.
Is a CPA letter required to qualify?
While not always required for bank statement loans, a CPA letter may be requested if you are using business income to qualify. This is especially so if you work in a field that has traditionally higher expense factors, like restaurants. A CPA letter verifies your business operations and confirms that you have the stated income.
Can I get a bank statement loan with a 1099 income?
Yes, our bank statement loan lenders are happy to work with you if you have 1099 income.
What is the minimum FICO score needed?
The minimum credit score a mortgage lender will accept is usually 620. However, some lenders will want scores as high as 700, depending on other factors, like how much income you make in a month.
What is the maximum LTV for a bank statement loan?
The typical loan-to-value ratio is usually 80%, but some lenders may accept as high as 90%. This depends on your credit report, income, and the amount of your home loan.
Can I refinance using a bank statement loan?
Yes, you can refinance an existing mortgage with a bank statement loan. This may be a good option for self-employed borrowers and independent contractors who can no longer meet the income verification necessary for a refinance.
Can I use this loan for an investment property?
Yes, you can use bank statement loans for an investment property. However, you may find that other loan programs, like Debt Service Coverage Ratio (DSCR) loans are better suited for investing. Contact us to discuss which mortgage product is best suited to your needs.
Do I need to own 100% of the business to qualify?
In general, you need a minimum of 25% business ownership to qualify using your business bank statements. Some lenders may require a 50% ownership stake.
What industries commonly qualify for this loan?
Gig workers, freelancers, independent contractors, self-employed individuals, small business owners, and real estate investors often opt for bank statement loans because they typically do not have the income verification documents required for other types of loans, such as Federal Housing Administration (FHA) and VA loans.
What down payment is required?
These mortgages cannot be bundled and resold by Fannie Mae on the secondary mortgage market. This makes bank statement loans riskier for mortgage lenders, and so they typically require a larger down payment to protect their bottom line. You can expect to pay somewhere between 10% and 20% of the home’s purchase price.
Can I use a bank statement loan if I had a recent foreclosure?
Generally, you must wait 12-24 months after a foreclosure to secure a new mortgage loan. In addition to the waiting period, you may also face potentially higher interest rates due to lower credit scores.
How is my income calculated from deposits?
Your deposits will be averaged over the total period of statements, usually 12 to 24 months. If you are using business bank statements, the lender will apply a default expense factor, usually 50%, to account for operating expenses. Industries with traditionally higher expense factors may have a 70% factor applied.
What if I have large deposits that aren’t business income?
Non-business deposits may be seen as a red flag to lenders, so you may be required to provide additional documentation. In some cases, they will be disqualified from income calculations, as it’s assumed you will not use these irregular deposits for your mortgage payments.