Bank Statements Loan Guide

What is a bank statement loan? 
How do bank statement loans work? 
Who can benefit from a bank statement mortgage?
Bank statement loan vs. traditional mortgage
Pros and cons of bank statement mortgages
Bank statement loan requirements
Minimum down payment requirements chart
Credit scores & interest rates on a bank statement loan
How to apply for a bank statement loan
Alternatives to bank statement loans
Bank statement loan FAQ

What is a bank
statement mortgage?

Bank statement loans are a type of mortgage that uses bank statements instead of tax returns to qualify for a mortgage loan. Non-QM mortgages are like loans with an extra “risk sticker” on them for lenders. 

Unlike regular mortgages, the government (through Fannie Mae and Freddie Mac) doesn’t guarantee these loans. This means if a borrower stops paying, the lender is stuck with the problem. Because of this extra risk, both the lender and the borrower might end up in a tougher situation.

How do bank statement loans for
self employed work?  

Bank statement mortgages are not no income verification loans. No income verification mortgage loans are DSCR loans used to buy investment properties. Bank statement loans instead, allow self-employed borrowers to apply for a home loan without providing tax returns, pay stubs, and W-2s. 
Some people may see bank statement loans as no income verification home loans, but in reality, the income is verified through deposits in bank statements, and the lender needs to determine if the borrower can produce sufficient income to cover the mortgage loan.
The borrower can provide non QM mortgage brokers as little as 12 months of personal bank statements that show regular deposits, and even business bank statements too. 

Who can benefit from a
bank statement mortgage?

Bank statement lenders can be a good option for people who:

Have non-traditional income: Self-employed individuals, freelancers, gig workers, and retirees.
Have seasonal income: This includes seasonal workers and real estate investors.
Have income that can’t be documented traditionally with paystubs, W2s, or tax returns.

Bank statement loans
Florida may be helpful for:

Self-employed borrowers
Gig workers looking to buy a home
Small business owners
Independent contractors
Freelance employees

Bank statement loan vs. traditional mortgage

Business bank statement loans or a personal bank statement mortgage program allows you to verify your income on a mortgage loan application using documented bank deposits instead of tax forms. Traditional mortgage loans use tax returns, W2s, and pay stubs to verify monthly income. 
Bank statement mortgages are a type of non-qualified mortgage loan. Non QM mortgage lenders look at a borrower’s bank statement deposits over 12 to 24 months, and uses that information to verify that the borrower has enough income to cover the monthly loan payments.
Interest rates may be higher with bank statement loans, so borrowers should try to qualify with tax returns first, if possible. 

Pros and cons of bank statement mortgages

They differ from traditional mortgages in their requirements for documentation, credit score, and debt-to-income ratio.


Flexibility: 12 month bank statement mortgage, and even 24 months can be more flexible than traditional mortgages in terms of documentation, credit score, and debt-to-income ratio.
Convinience: Bank statement mortgages can be helpful for self-employed borrowers, gig workers, and those with non-traditional income.
Flexibility in proving income: Borrowers can qualify based on bank statements instead of tax returns.
May have higher loan limits: Bank statement mortgages can have loan amounts of up to $5 million and DTI ratios of up to 50%.


Higher borrowing costs: A bank statement loan program may have higher interest rates and fees.
Larger down payment: Bank statement mortgages may require a down payment as low as 10%, but this may be higher if the credit score is low.
Prepayment penalties: Bank statement mortgages may come with prepayment penalties.
Minimal regulation: Bank statement mortgages have minimal regulation.
Most lenders don’t offer bank statement loans.

Bank statement loan requirements

Here are some common requirements:

A credit score of at least 640.
A down payment of at least 10% (see down payment requirement chart below).
A debt-to-income ratio of 50% or lower.
At least one year’s worth of bank statements.
At least two years of self-employed income.
Current year unaudited profit and loss statement for your business.
Business licenses, articles of incorporation, organization documents, and other related paperwork.
Adequate cash reserves, with a minimum of six months of mortgage payment reserves
Escrow for taxes and insurance.
A second appraisal on purchases over $1,500,000.00
Twenty-four months of seasoning from credit events like bankruptcies, foreclosures, or short sales.

Minimum down payment requirements chart for bank statement loans

The minimum down payment requirement depends on your credit score. The lower your credit score, the more you will have to put down and the higher the interest rate will be. The higher the credit score, the less you will have to put down and the lower the bank statement loan rate.

How does credit score affect interest rates on a bank statement mortgage?

A person’s credit score can affect the interest rate on a bank statement loan because lenders may charge different interest rates based on credit score. Generally, you can qualify for a bank statement loan with a credit score as low as 640, but a 740 or higher gets you a better rate and terms. If your credit score is on the lower end, though, you might also need to make a larger down payment.

Interest rate risk surcharges are not the same as the interest rate you’ll see on your loan statement. Instead, it’s an additional amount lenders may charge on top of the base rate. This surcharge is typically applied to borrowers with lower credit scores, usually below 740.
For example, if you have a credit score of 640 and the base interest rate for a loan is 7%, you might be charged an interest rate surcharge of 2.375%. This would mean your total interest rate for the loan would be 9.375% (7% base rate + 2.375% surcharge).

How to apply for a bank statement loan

The main goal is to prove that you’re an experienced self-employed professional, business owner, or independent contractor and that you have consistent, reliable income with which to pay your mortgage. You will be income-averaged over the last 12 or 24 bank statements you provide. You generally will have a lower interest rate if you provide 24 months.

Bluecastle Lending can find you the best bank statement mortgage lenders. As one of the top-producing mortgage brokers near you, Bluecastle has partnerships with several wholesale lenders, which gives us access to a variety of unique types of mortgages and deals.

Here’s how to move forward:

Step 1

Get preapproved. Fill out the online loan application questionnaire. Bluecastle will not run your credit until we speak with you, but this will start the process of getting preapproved.

Step 2:

Upload your bank statements into our portal. Your online portal will be created, so you can easily upload your documentation.

Step 3:

We will submit your loan. The nature of these loans often results in loan denials. To avoid this, Bluecastle has a policy of submitting the loan to the best mortgage lender for you, who will ultimately fund the loan.

Step 4:

Start shopping for a house. Once we get the approval, we set up your portal with your loan options, payments, cash you will need, and you can confidently start shopping for a house!

Do I qualify for the $10,000.00 Closing Cost Assistance Credit Offer doing a Bank Statement Loan?

Yes you do! You can get up to $10,000.000 from Bluecastle Lending when you bundle your services with Bluecastle Realty & Bluecastle Title! Plus, refinance higher interest rates on us when the mortgage rates drop! See each offer for more details, terms, and conditions.

Alternatives to bank statement loans

Bank statement loans are one way for people — like self-employed individuals or gig workers — to borrow money, but there are other mortgage loan options. These alternatives include:

DSCR loans: If you’re a real estate investor, you might qualify for a debt service coverage ratio (DSCR) loan, whose income is determined based on your portfolio’s cash flow. This loan is truly a no-income verification loan; however, the interest rate will be slightly higher than a bank statement loan. 
Conventional loans tend to offer much better interest rates and terms than bank statement loans, DSCR loans, and jumbo loans. 
Jumbo loans: A jumbo loan will typically have a higher interest rate than a Conventional mortgage, stricter underwriting rules, and a larger down payment than a standard mortgage. However, the interest rate will be lower than a bank statement loan.
FHA loans:: FHA loans are especially popular among first-time homebuyers due to their flexible approval criteria. These loans are for primary residences only.
VA loans: Eligible service members, veterans, and surviving spouses can obtain a VA-backed mortgage with no money down. These loans are for primary residences only. 

Bank statement loan FAQ

Is it better 24 months, or 12 months bank statements?

For interest-rate reasons, it is better 24 months worth of bank statements as the rate will be lower. However, if your income average is not enough to qualify for the loan, you may have to do 12 months instead.

Are bank statements verified with my bank institution?

Yes, they are. You can’t make fake bank statements for loan as you will probably get caught near the end of the loan process and just before funding. Banks and mortgage lenders do have Quality Control departments, with some banks prosecuting mortgage fraud. 

What is the minimum required and maximum bank statement loan amount?

-The minimum loan amount is $100,000.00, and the maximum generally is $3,000,000.00. Higher loan amounts are on a case-by-case basis. 
ess than 20% down.

Can I use bank statement mortgages for a home purchase or a refinance?

Bank statement home loans can be used to purchase your next home or refinance your current mortgage. There are two types of refinancing options. Rate & term refinance is often used by homeowners to get a lower interest rate and more affordable monthly mortgage payments, or you can get a cash-out to refinance, which allows you to pull equity out of your home and convert it into cash. 

Can I get a bank statement loan if I am not self-employed?

If you have an income source that is challenging to document using conventional methods, yes you can however,  requirements can vary among lenders. For example, if you can demonstrate a consistent and stable income through your bank statements, you may be eligible for a bank statement loan.

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