Bank statement loans qualify you on deposits instead of tax returns. Here is roughly how lenders turn deposits into income.
How it works
Monthly income = deposits ÷ months × (1 − expense factor) × ownership share
With personal statements, lenders usually count eligible deposits without an expense factor. With business statements, they apply an expense factor for business costs. Deposits that aren’t income, such as transfers between your own accounts, loan proceeds and refunds, are taken out first.
Keep in mind
- Large or irregular deposits may need to be explained or left out.
- Each lender sets its own factors and rules, so treat this as a starting point to discuss with Jack.
Questions
How do lenders calculate income on a bank statement loan?
They add up eligible deposits over 12 or 24 months, remove anything that is not income, apply an expense factor for business accounts, and divide by the number of months.
Are 12 or 24 months of statements better?
Twelve months reflects recent income; twenty-four smooths out a slow or unusual year. Some lenders price the two differently.
