BORROWER GUIDES · ILLINOIS & MIDWEST

How Do Bank-Statement Mortgage Loans Work?

How do bank-statement mortgages work for self-employed borrowers?

Bank-statement mortgages may help eligible self-employed borrowers document income using personal or business account statements instead of tax returns. Faulkner Financial Group compares available options through Barrett Financial Group LLC, NMLS #181106. Lenders still review eligible deposits, business expenses, credit, debts, property, and available funds; approval and terms vary.

Running a business can make your mortgage paperwork more complicated. If tax-return income does not support the financing you need, a bank-statement loan may be an option worth comparing.

What changes?

Some programs review 12 or 24 months of personal or business bank statements instead of using tax returns to establish qualifying income. Program requirements vary. This is an alternative way to document income—not a loan with no income review.

Deposits are not automatically qualifying income

Lenders review eligible deposits and account for business expenses. Transfers between your own accounts and other non-income deposits may be excluded. Business ownership, deposit consistency, and the lender’s expense calculation can affect the result.

Hypothetical planning example: A business deposits $20,000 a month. That does not automatically give its owner $20,000 in qualifying monthly income. Ask for a lender-specific calculation before choosing a price range.

What else matters?

Credit, debts, down payment or equity, reserves, property eligibility, and business history still matter. Rates, fees, and terms vary. Compare a bank-statement option with any conventional or other financing you qualify for; alternative documentation does not automatically make it the better choice.

Prepare for a useful first conversation

Have your business history, ownership details, account types, purchase or refinance goal, and available funds ready. Ask which statements and supporting documents the lender needs. Use the team’s secure document process rather than sending financial records through social media.

Ask three questions: How much income can this lender use? What are the total costs? What other loan options should I compare?

Let’s look at your options. Call or text (847) 238-9932, or explore bank-statement financing.

Faulkner Financial Group LLC, powered by Barrett Financial Group LLC, NMLS #181106. Educational information only; not a rate quote, approval, or commitment to lend. Availability and eligibility depend on applicable licensing, lender guidelines, property, and borrower qualifications. All loans are subject to underwriting. Examples are hypothetical and do not describe actual clients or loan offers.

Discuss your financing options

Bank-statement income: an example

Hypothetical calculation: a business has $240,000 in eligible deposits over 12 months. Dividing by 12 gives $20,000 per month. If a lender applies a 50% business expense factor and the borrower owns 100% of the business, the starting income calculation would be $10,000 per month, before other lender adjustments.

This is not a universal formula. Expense factors, ownership percentages, excluded deposits, and documentation requirements vary. A lower documented expense ratio may require third-party support. Consistent deposits alone do not establish approval.

What to have ready

The requested 12 or 24 months of complete statements.

Business ownership and operating-history documentation.

Explanation of large deposits and transfers.

Available down payment, closing funds, reserves, and current debt obligations.

Ask for a comparison with tax-return-based financing before choosing a program. For an eligible rental investment, also review DSCR financing; for a broader overview, see Non-QM loans Interest-only mortgages.

Lender example: Angel Oak’s bank-statement program ↗ illustrates one lender’s expense-factor approach. This is a reference, not a quote or confirmation of that product’s availability through our team.