Bank statement loans
Bank Statement Loans for the Self-Employed
If you own a business, your tax return is designed to show the smallest defensible income. Then you apply for a mortgage and the same document is read as proof you cannot afford one.
Qualifying on Deposits Instead
A bank statement program looks at money actually moving through your accounts over a period of months and uses that to establish income, rather than the net figure at the bottom of a return after every legitimate deduction you took.
It is built for people whose paperwork understates them: contractors, tradespeople, agents, consultants, restaurant and shop owners, anyone paid on 1099s. Every write-off that lowered your tax bill also lowered the income a conventional underwriter sees, and for a lot of business owners that gap is the entire reason they were told no.
What I Will Ask You For
Statements, over a stretch long enough to show a pattern rather than a good quarter. Whether those are business accounts or personal ones depends on how you actually run the business, and it is worth telling me the truth about that early — a lot of small operators run both, and which set we use changes the answer.
Two things tend to complicate a file. Large deposits that did not come from the business need an explanation, because an underwriter cannot count money that might be a loan. And transfers between your own accounts can look like income twice if nobody flags them. Neither is fatal. Both are much easier to handle before we submit than after.
If you have an accountant, looping them in early usually saves a round trip. They already know the shape of your books and can answer in an afternoon what would otherwise take a week of back-and-forth.
What to Expect
These are not government-backed programs, so the terms are set by the individual investor and they vary more than agency lending does. Expect to provide statements covering a meaningful stretch of time, and expect the structure to cost something relative to a conventional loan — you are being underwritten on a different kind of evidence.
Because Edge Home Finance, LLC is a mortgage broker, I can take the same set of statements to several wholesale lenders rather than accepting one investor’s read of your business. On self-employed files that matters more than on almost anything else I do.
If your business has been running for a while and the returns do not tell the story, bring me twelve months of statements and I will tell you what they support.