What Is a Bank Statement Loan and Who Qualifies?
If you’re self-employed, you already know the struggle. You make good money, your business is doing well, but when it comes time to apply for a mortgage? Traditional banks take one look at your tax returns and suddenly act like you’re broke.
Here’s the thing, though: you’re not broke. You’re just smart about your taxes.
That’s where a bank statement loan comes in. It’s a type of Non-QM mortgage designed specifically for people like you: freelancers, business owners, 1099 contractors, and anyone else who writes off business expenses and doesn’t fit the traditional W-2 mold. Instead of relying on tax returns that show minimal income (thanks to all those write-offs), lenders look at your actual bank deposits to see what you’re really bringing in.
And if you’re in the Charlotte area, you’re in luck. On Point Home Loans, Inc. works with over 200 lenders who offer bank statement loans, which means we can find options that traditional banks won’t even consider. Let’s break down how these loans work, who they’re for, and why they might be exactly what you need to finally buy that home.
What Is a Bank Statement Loan and How Does It Work?
A bank statement loan is a mortgage option that uses your bank statements instead of tax returns to verify your income. Pretty straightforward, right?
Traditional mortgages want to see W-2s and tax returns showing consistent, documented income. But when you’re self-employed, your tax returns often show way less than what you actually earn because you’re writing off business expenses. Equipment, home office costs, mileage, and marketing—all those deductions lower your taxable income. Good for taxes, bad for mortgage applications.
Bank statement loans flip that script. Instead of looking at your adjusted gross income on your 1040, lenders review several months of your personal or business bank statements. They’re looking at your deposits: what’s actually coming into your account month after month. From there, they calculate your average monthly income and use that to determine how much home you can afford.
Some lenders will accept personal bank statements, while others prefer business accounts. It really depends on how you run your business and where most of your income lands. Either way, the idea is the same: show what you’re actually making, not what you’re reporting to the IRS.
There’s usually a bit of underwriting involved to account for expenses that flow through your account (like paying subcontractors or buying inventory), but that’s nothing compared to the headache of trying to qualify the traditional way when your tax returns make you look like you barely scrape by.
Who Qualifies for a Bank Statement Loan?
You don’t have to be a millionaire to qualify for a bank statement loan. You just need to be self-employed and able to show consistent income through your bank deposits.
Here’s who typically benefits from this type of loan:
- Freelancers and independent contractors who get paid via 1099s
- Small business owners who reinvest profits back into their companies
- Real estate investors with rental income or fix and flip properties
- Commission-based professionals like real estate agents or sales reps
- Gig workers who pull income from multiple sources
Now, what do you actually need to qualify? Here’s the breakdown.
Documentation You’ll Need
Getting approved for a bank statement loan isn’t as complicated as you might think. Here’s what most lenders want to see:
- Personal or business bank statements showing your income deposits
- Credit score requirements vary by lender
- Down payment requirements vary by lender and your financial profile
- Proof of self-employment, such as 1099 forms or other income documentation
- Standard mortgage documents like ID and proof of assets
The exact requirements vary depending on the lender and your financial situation, but that’s the general idea. And since On Point Home Loans, Inc. has access to over 200 lenders, we can shop around to find one that fits your specific setup.
Credit and Down Payment Requirements
Bank statement loan programs have different credit and down payment requirements depending on the lender. Generally speaking, a higher credit score will give you more options and better interest rates. If your credit is lower, you might need a larger down payment or accept a slightly higher rate.
Down payment requirements also vary by lender and depend on factors like your credit profile and income stability. The exact requirements will depend on your financial situation, but that’s where working with On Point Home Loans, Inc. helps. Since we have access to over 200 lenders, we can shop around to find one that fits your specific setup.
Advantages of Bank Statement Loans for Self-Employed Borrowers
If you’ve ever been turned down for a mortgage because your tax returns didn’t reflect your real income, you already know why bank statement loans matter. Here are the main benefits:
Your Tax Write-Offs Won’t Hurt You
This is the big one. When you’re self-employed, writing off business expenses is smart tax planning. But traditional lenders see those write-offs and assume you don’t make enough money to afford a mortgage. With a bank statement loan, your deductions don’t work against you. Lenders look at what’s actually coming in, not what you’re showing the IRS.
Streamlined Approval Process
Because you’re not waiting on tax transcripts or dealing with complicated income calculations, bank statement loans can often move more smoothly than traditional mortgages. You submit your bank statements, the lender reviews your deposits, and you’re on your way. It’s not instant, but it’s typically a smoother experience than the usual back and forth with conventional loans.
More Flexibility for Income Verification
Traditional mortgages are rigid. They want two years of tax returns, consistent W-2 income, and everything else in a neat little box. Bank statement loans are more flexible:
- Does income vary month to month? That’s fine.
- Just started your business without two years of tax returns? That’s fine too.
- Multiple income streams from different sources? No problem.
As long as your bank statements show consistent deposits, you’re in the game. This flexibility also extends to renovation loans and other specialized financing options for self-employed borrowers.
Access to Competitive Rates
A lot of people assume bank statement loans come with sky-high interest rates, but that’s not really the case anymore. While rates may be slightly higher than conventional loans in some cases, they’re often more competitive than borrowers expect. If your credit is solid and you can put down a larger down payment, you can get rates that are pretty close to traditional mortgages.
When you work with On Point Home Loans, Inc., you’re tapping into a network of over 200 lenders. That means we can shop around to find competitive rate options instead of being stuck with whatever one bank offers.
Bank Statement Loans vs. Traditional Mortgages
So how do bank statement loans stack up against regular mortgages? Let’s compare the key differences.
1. Income Verification
Traditional mortgages rely on W-2s and tax returns. If you’re salaried, that’s great. If you’re self-employed and write off half your income, not so much. Bank statement loans use your actual bank deposits, which paints a much more accurate picture of what you earn. If you have stable W-2 income, a fixed mortgage might be the better option.
2. Credit Requirements
Both loan types care about credit, but traditional mortgages tend to be a little more forgiving if your income documentation is rock solid. Bank statement loans may have different credit requirements depending on the lender, but the difference isn’t huge. Your specific requirements will depend on your overall financial profile.
3. Down Payment
FHA loans let you put down as little as 3.5%, and conventional loans can go as low as 3% in some cases. Bank statement loans typically require a higher down payment, though the exact amount varies by lender and your financial profile. If it’s the difference between getting approved or not, it’s worth it.
4. Interest Rates
Traditional mortgages generally have lower rates, especially if you’re going for an FHA or conventional loan with good credit. Bank statement loans may have slightly different rates depending on your profile and the lender. The best way to know what rate you qualify for is to talk with On Point Home Loans, Inc., and let us shop our 200+ lenders for your best option.
5. Loan Limits
Both loan types can handle purchase prices well into the jumbo range. Bank statement loans don’t have the same strict conforming loan limits as conventional mortgages, so if you’re buying a pricier home, you’ve got options.
6. Closing Timeline
Traditional mortgages can take time, sometimes longer if there are hiccups with income verification or appraisals. Bank statement loans can close in a similar timeframe, but because the income verification is simpler, there’s less chance of last-minute delays. On Point Home Loans, Inc. works to keep the process moving smoothly.
How to Apply for a Bank Statement Loan with On Point Home Loans, Inc.
Ready to get started? Here’s how the process works when you apply for a bank statement loan through On Point Home Loans, Inc.
Step 1: Schedule a Consultation
First things first: talk to one of our advisors. We’ll review your income, expenses, credit, and goals to figure out if a bank statement loan is the right fit. We’ll also explain exactly what documentation you’ll need and answer any questions you have. No pressure, no sales pitch. Just straight answers.
Step 2: Gather Your Documentation
Once you decide to move forward, you’ll need to pull together your bank statements, proof of self-employment, and the standard mortgage docs like ID and asset statements. We’ll give you a checklist so you know exactly what to send.
Step 3: We Shop 200+ Lenders for You
This is where On Point Home Loans, Inc. really shines. We’re not a bank with one set of loan programs. We work with over 200 lenders, which means we can find the bank statement loan that fits your situation. More options, more flexibility. We handle the legwork so you don’t have to.
Step 4: Get Pre-Qualified
Once we find the right lender and program, we’ll get you prequalified. That means you’ll know how much home you can afford, and you’ll have a pre-qualification letter to show sellers. In a competitive market like Charlotte, that letter can make or break your offer.
Step 5: Close on Your Home
After you find a house and your offer gets accepted, we’ll guide you through the rest of the process: appraisal, underwriting, final approval, and closing. We stay in touch the whole way so there are no surprises.
Why Choose On Point Home Loans, Inc. for Your Bank Statement Loan?
Look, you’ve got options when it comes to mortgage brokers. But here’s what sets On Point Home Loans, Inc. apart:
- 50+ years of experience based right here in Charlotte
- 200+ traditional lenders and 3,000+ commercial lenders in our network
- Local market expertise for Charlotte and the surrounding areas
- Custom loan solutions for every borrower, not cookie-cutter programs
We know the local market, we know the lenders, and we know how to get self-employed borrowers approved when traditional banks say no.
With access to over 200 lenders on the traditional side and 3,000+ on the commercial side, we’re not stuck offering you one solution. We find the loan that actually works for you, whether that’s a bank statement loan, a DSCR loan, or something else entirely.
And we’re not here to make the process harder than it needs to be. We explain things in plain language, we answer your questions, and we keep things moving so you can close on time.
Ready to Get Started?
If you’re self-employed and tired of being turned down by traditional lenders, it’s time to try a different approach. Bank statement loans give you a real shot at homeownership without the hassle of explaining every tax write-off to a skeptical banker.
Schedule a free consultation with an advisor at On Point Home Loans, Inc. today. We’ll walk you through the bank statement loan process, answer your questions, and help you get pre-qualified so you can start house hunting with confidence.
Frequently Asked Questions
What credit score do I need for a bank statement loan?
Credit score requirements for bank statement loan programs vary by lender. Generally, a higher credit score will give you access to better rates and more lender options. The higher your score, the easier the approval process and the lower your interest rate. If your credit is on the lower end, don’t worry. It’s still possible to get approved. You might just need to put down a bit more up front or accept a slightly higher rate. When you work with On Point Home Loans, Inc., we can help you understand what you qualify for based on your specific credit profile.
Can I use business bank statements instead of personal ones?
Yes, absolutely. In fact, some lenders actually prefer business bank statements if that’s where the majority of your income flows through. If you’re a sole proprietor or you run an LLC and pay yourself irregularly, business statements can give a clearer picture of your actual earnings. Some lenders will accept personal statements, some want business, and some will review both. It really depends on how you structure your business and which account shows the most consistent deposits. When you work with On Point Home Loans, Inc., we’ll figure out which option works best for your situation.
How much do I need for a down payment on a bank statement loan?
Down payment requirements for bank statement loan programs vary by lender and depend on your credit score, income stability, and overall financial profile. Some programs may require less, while others ask for more, especially if your credit is lower or your income fluctuates. The good news is that a larger down payment can help you secure a better interest rate and make the approval process smoother. It’s all about finding the right balance for your financial situation. On Point Home Loans, Inc. will help you understand what options are available based on your specific circumstances.
Are bank statement loans only for self-employed people?
For the most part, yes. Bank statement loans are specifically designed for self-employed borrowers, freelancers, business owners, and 1099 contractors who don’t have traditional W-2 income. If you’re a salaried employee with consistent paychecks and tax returns that reflect your actual income, a traditional mortgage is probably the better option. But if you write off business expenses, have variable income, or get paid through multiple sources, a bank statement loan is built for you. It’s all about matching the loan type to your income documentation.
How long does it take to close on a bank statement loan?
The timeline for closing on a bank statement loan is similar to a traditional mortgage. The income verification process can actually be faster since you’re not waiting on tax transcripts or dealing with complicated income calculations. That said, appraisals, title work, and underwriting still take time. If everything goes smoothly and you have all your documentation ready upfront, the process can move along efficiently. On Point Home Loans, Inc. stays on top of the process to keep things moving and make sure there are no last-minute delays.
