Key Takeaways:

  • Bank statement loans enable self-employed borrowers and those who don’t receive a W-2 to qualify for a mortgage using bank statements rather than pay stubs or tax returns. 
  • Bank statement loans offer greater flexibility compared to conventional loans when it comes to income verification, term length, loan amount, and minimum DTI ratio, but may have slightly higher rates and down payment requirements. 
  • Not every lender offers bank statement loans, so finding an experienced bank statement lender is key for securing the best rates and terms. 

A bank statement loan is a type of non-qualified mortgage loan that allows you to qualify based on bank statements instead of tax returns and W-2s

For a bank statement loan, the lender will require prospective borrowers to provide a certain number of months’ worth of bank statements in order to prove their ability to repay the loan. This enables self-employed borrowers and even those buying a house with low income to access home loans, especially if their taxes don’t reflect their full income.

Bank statement mortgage programs are often a good option for self-employed individuals, business owners, and retirees who need an alternative income verification option. Find out whether a bank statement home loan from Griffin Funding is a good fit for you.

What Is a Bank Statement Loan?

Bank statement loans allow borrowers to qualify for a home loan using a series of bank statements rather than tax returns or pay stubs. This can be beneficial for people like business owners, freelancers, or retirees, who may not receive a W-2 or pay stubs or whose income may not be accurately reflected in their tax documentation. 

With a bank statement mortgage, you can use 12 or 24 months’ worth of bank statements to verify your income. The lender will review these bank statements and your deposit history to determine whether you earn enough to qualify for a home loan.

We can help those who are self-employed with our Bank Statement Loan Program.

Being self-employed does not mean you can’t get home financing. You do not have to submit any tax returns or financial statements other than your bank statements to purchase a new home or to cash–out refinance an existing home that you already own.

Bank statement loans are popular with the following types of borrowers:

  • Business owners
  • Freelancers
  • Consultants
  • Contract workers
  • Independent contractors
  • Sole proprietors
  • Gig economy workers
  • Realtors
  • Entrepreneurs
  • Retirees

If you’re unsure whether a bank statement mortgage is right for you, you can ask your lender about your financing options or contact Griffin Funding directly to learn more.

Bank Statement Loans vs Traditional Home Loans

Bank statement loans differ from traditional home loans in a few key areas. In the table below we lay out the biggest differences between these two methods of home financing.

Bank Statement Loan Traditional Mortgage
Who is it for? Business owners, freelancers, investors, retirees, or anyone who doesn’t receive a W-2 Most employees who receive a W-2
What is it used for? Purchasing a primary residence, a vacation home, or an investment property Purchasing a primary residence, a vacation home, or an investment property
How is income verified? 12 to 24 months of bank statements Tax returns and pay stubs
What’s the down payment? 10% minimum 3% to 5% minimum (20% to avoid PMI)
What’s the minimum credit score? 620 620
How long is the loan term? 15 to 40 years 15 to 30 years

How Are Bank Statement Loans Calculated?

Now that you understand what a bank statement loan is, you might wonder how lenders use your bank statements to determine your income.

These are some of the best types of loans for self-employed individuals, business owners, entrepreneurs, and investors who don’t have traditional income sources and pay stubs to prove their income. Additionally, these borrowers take deductions on their taxes, so their tax returns don’t accurately reflect their true income and ability to repay the loan.

With a bank statement loan, you can use your bank statements to demonstrate your ability to repay. But how do bank statement loans work?

Here are three key steps that take place in order to calculate how big of a bank statement loan you qualify for: 

  1. Calculate qualified income: When you apply for a bank statement loan, an underwriter will calculate your qualified income by adding the total deposits in your bank accounts for 12 or 24 months and dividing that number by 12 or 24 to give them an average monthly income.
  2. Meet basic loan requirements: Self-employed borrowers can choose to use 12 or 24 months’ worth of bank statements, but there are other requirements. For instance, lenders like to see that you’ve been self-employed for at least two years or one year if you’ve remained in the same type of role or industry. 
  3. Determine eligible deposits: The deposits that can be used to calculate your income for a home loan depend on how you pay yourself. For instance, if you deposit money directly into your business account, lenders will typically use 50% of the deposits to determine your income. However, if you transfer funds from a business account to a personal account, lenders may allow 100% of your deposits to qualify for the loan. Deposits that are not business-related are called “disallowed deposits” and will not be counted toward your income.

This doesn’t mean that you need monthly deposits, either. Instead, you may have seasonal income. For instance, if you earn $100,000 in just three months, lenders will divide that number by 12 (the number of months in a year) to find your average monthly income.

As long as your deposits demonstrate that you earn enough to repay your loan balance every month, your income will help you qualify for a bank statement loan. You can use this bank statement loan calculator if you’re unsure whether you earn enough to qualify based on your bank statement deposits as income. Speaking with a loan specialist can also help you determine if you’re ready to apply for a mortgage.

What Is a 6 Month SOFR Bank Statement Loan?

A 6 month SOFR bank statement loan will qualify you based on bank statements alone, rather than on the net income stated on your tax return. Many self-employed individuals and business owners may not qualify for conventional loans, as they take deductions against their business. A SOFR bank statement loan begins at an initial start rate but then adjusts every six months based on the 30-day average Secured Overnight Financing Rate (SOFR) index. While your SOFR rate will periodically adjust, you can also refinance your SOFR mortgage later.

Griffin Funding offers a variety of funding options, so self-employed entrepreneurs and business owners can find the funding right for them. That includes:

  • 6 month SOFR ARMs (fixed for six months and adjusting every six months thereafter)
  • 1/6 ARMs (fixed for one year and adjusts every six months)
  • 5/6 ARMs (fixed for five years and adjusts every six months) 
  • 7/6 ARMs (fixed for seven years and then adjusting every six months)
  • 10/6 ARMs (fixed for ten years and then adjusted every six months)
  • 15-year fixed
  • 30-year fixed
  • 40-year fixed

6 month SOFR bank statement loans are a type of Non-QM loan. While other bank statement loans have fixed rates, they will generally have higher interest rates than those you get with the introductory period of an ARM. In addition to 6 month SOFR bank statement loans, we also offer 6 month SOFR DSCR loans, 6 month SOFR asset-based loans, and more.

Today’s Bank Statement Loan Rates

Pros and Cons of Bank Statement Loans

It’s important to weigh the pros and cons of bank statement loans as you consider this type of financing. Read on to compare the benefits and drawbacks of bank statement loans. 

Benefits of bank statement loans

Some of the key benefits of bank statement loans include: 

  • Qualify using bank statements: The main benefit of this type of financing is that you can qualify using 12 or 24-month bank statements rather than pay stubs or tax returns. This makes it easier for small business owners and self-employed individuals to qualify for home financing. You may use your business bank statements or personal bank statements to qualify. 
  • No tax returns needed: When underwriting a bank statement loan, lenders don’t necessarily need to look at your tax returns, which may not accurately represent how much income you actually earn. 
  • Down payments as low as 10%: You can get a bank statement loan with a minimum down payment of 10%. 
  • Cash-out refinance up to 80% of property value: A cash-out refinance loan can provide you with funds needed for big purchases, home improvements, emergency expenses, and more. If you are looking to cash-out more than 80% and not touch the rate on your current first mortgage bank statement home equity loans (HELOANs) are also available as an option.
  • Loan amounts of up to $20 million: High loan amounts make it possible to widen the scope of your home search and purchase high-value properties. 
  • DTI ratios of up to 50% can qualify: Flexible DTI ratio requirements make qualifying for a bank statement loan easier. 
  • Fixed- and adjustable-rate options available: Choose from a fixed-rate bank statement loan or opt for an adjustable rate. 
  • Interest-only option available: You can set up bank statement loans through Griffin Funding so that you only pay the loan’s interest for a predetermined period of time. 

Drawbacks of bank statement loans

Just like any other financing option, bank statement loans have drawbacks that are worth considering before you apply. Here are some of the most notable cons of bank statement loans: 

  • Must be self-employed for at least two years: One of the drawbacks for self-employed borrowers is that you have to be able to prove that you’ve been self-employed for two years—and if you haven’t quite reached that milestone, you’re out of luck and will have to wait. Exceptions are considered for business owners that have been in business for one year if you have at least two years of experience in the same line of work.
  • Potentially higher interest rates: You may also have to contend with higher interest rates and down payments than more traditional loan options, but of course, this depends on your credit score and overall financial circumstances. That said, Griffin Funding strives to secure competitive interest rates for our customers.
  • Minimal regulation: Since bank statement loans are a type of non-QM loan, they’re not regulated like traditional mortgages. This means mortgage lenders can take liberties when it comes to eligibility criteria.

At Griffin Funding, we aim to help our borrowers find the best loan options with favorable terms based on their individual circumstances.

Bank Statement Loan Success Story

Ricardo is an excellent example of how a bank statement loan can help someone who is self-employed or who owns their own business. Ricardo, as a successful self-employed construction worker, had a healthy and regular income each month, but after writing off his expenses, he was unable to report sufficient income to qualify for a traditional loan.

Thanks to a bank statement lending program, Ricardo was able to apply for a bank statement loan without having to show his tax returns, which meant that his business write-offs were not a problem. Ricardo’s monthly income bank deposits over the past 12 months were enough to qualify him for a bank statement loan. His bank statement showed:

  • January: $5,250
  • February: $4,200
  • March: $3,500
  • April: $8,400
  • May: $9,500
  • June: $5,300

Ricardo had a six-month average income of around $6,000 per month. After reviewing a full year of Ricardo’s bank statements, the lender was able to approve a loan based on that amount. 

Although the down payment and interest rate were slightly higher than a traditional loan, Ricardo was happy to be able to purchase a home. What’s more, he could always return the following year and, if he could report an increase in income, he would have the option of refinancing with a conventional loan, which could have a lower interest rate.

Applying for a Bank Statement Loan

As an experienced bank statement mortgage lender, Griffin Funding offers a streamlined application and approval process. Below we discuss how to qualify for a bank statement loan and the steps involved with navigating the application process. 

Bank Statement Loan Qualification Requirements

Below, we outline some of the basic requirements a borrower must meet in order to qualify for a bank statement loan: 

Loan Amount Years Self-Employed PITI Reserves Bank Statements Credit Score Down Payment
Under $1.5 million 2+ 3-6

months

12-24

months

720+ 10%
680+ 15%
660+ 20%
620+ 30%
Over $3 million 2+ 12

months

12-24

months

720+ 10%
680+ 15%
660+ 20%
620+ 30%

If you meet the following criteria, you may be eligible for a bank statement loan:

  • You must have been a business owner or self-employed for at least two years (one year allowed with two years of experience in the same line of work)
  • You must have at least 10% down (90% loan to value, w/ a 720+ credit score),
  • You must have at least 15% down (85% loan to value w/ a 680+ credit score
  • You must have at least 20% down (80% loan to value w/ a 660+ credit score)
  • You must have at least 30% down (70% loan to value w/ a 620+ credit score)
  • You must have three to six months of PITI reserves in the bank for loan amounts under $1.5 million. Twelve months of PITI reserves are required on loans over $3 million.
  • You may qualify with as little as 12 months of bank statement deposits.
  • You must have a credit score of 620 or above to qualify.
  • The minimum loan amount is $100,000, and the maximum loan is $20 million.

Special Considerations for Bank Statement Loans

  • You may use statements form more than one bank account, but they cannot be a combination of personal and business accounts.
  • Deposits which are transferred from a business account into a personal account are acceptable.
  • You may combine W2 income with bank statement income as long as the income is not being double counted.
  • No commingling of funds.
  • Foreign Bank Statements and Foreign Assets may be considered and must be translated to English.
  • You may use 100% of your personal bank statement deposits as income, 50% of your business bank statements (depending on your business type, you may be able to use more than 50% of the deposits)

The Bank Statement Loan Application Process

To apply for a bank statement loan, you can upload the last 12 or 24 month’s worth of bank statements from a bank account into the system or have our digital mortgage software sync with your bank and pull the information from your account. Bank statement loans are processed through a manual underwriting process. Since these loans are being reviewed by a person, they can take between 21 and 30 days to process. For more complex cases, it may take up to 45-60 days.

What States Are Bank Statement Loans Available in?

Self-employed workers have access to different bank statement loan programs depending on the state they’re in and the lender. Griffin Funding is proud to offer loans for borrowers in many states across the U.S. 

Find your state and apply for a bank statement mortgage today:


Additional Pending Bank Statement Loan states:

We are proud to help borrowers across the country find bank statement loans that help them make their dreams of homeownership a reality.

How Do I Find a Bank Statement Loan Lender?

Because interest rates and other important aspects of a bank statement loan program depend on the lender’s unique requirements for approval, it’s important for self-employed borrowers to do their due diligence before settling on a loan provider.

Here are a few general steps to take to find the right mortgage lender:

  1. Check their ratings and reviews: First, you want to determine whether they’re a credible lender you can trust. One of the ways you can do that is by checking their ratings and reviews across several platforms. Do they have good reviews? What are the biggest complaints, if any? 
  2. Feel them out: See what their customer service is like before moving forward with your loan. Do they seem to have your best interest in mind? Are they helpful or are they inattentive?
  3. Know what questions to ask: Savvy loan borrowers will keep the details in mind and learn about all the attached fees, requirements, and costs aside from interest rate payments in the principal amount. You want to find the best loan terms before you settle on a bank statement mortgage.
  4. Proven track record funding bank statement loans: Make sure the lender has the experience and expertise with self-employed borrowers and bank statement loans. Not all bank statement loans are the same; therefore, the lender should have multiple money sources that have an appetite for all types of bank statement non-QM loans. Choosing a lender that specializes in bank statement loans gives your loan a better chance of closing. 

Our team at Griffin Funding can help you find a bank statement mortgage loan program tailored to your needs with our cutting-edge technology and dedicated team of financial experts. Our team specializes in loans for self-employed individuals, so we understand what matters when it comes to finding the right home mortgage loan.

Ready to apply for a loan? Contact us today.


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See If a Bank Statement Loan Is Right for You

Bank statement loans are a convenient solution for modern-day borrowers, especially those whose financial profiles don’t fit neatly into traditional lending boxes. If you’re self-employed, a freelancer, an entrepreneur, or you have a fluctuating income that isn’t adequately captured by conventional income verification, a bank statement loan might be your key to homeownership.

Griffin Funding is a premier bank statement loan lender. With a commitment to flexibility and personalized solutions, we pride ourselves on helping our clients navigate the lending landscape efficiently and successfully. Trust Griffin Funding to guide you in determining if a bank statement loan aligns with your financial journey. Apply for a mortgage online today or reach out to learn more about your mortgage options and stay up-to-date with today’s bank statement loan rates. 

If you want to clean up your finances before submitting an application, you can get a comprehensive overview of your financial profile with the Griffin Gold app. This all-in-one platform offers a unique blend of financial wellness tools and real estate guidance, perfect for new home buyers and seasoned investors. Enjoy consolidated financial overviews, expert mortgage assistance, and budgeting tools. Stay informed with free credit management, property value tracking, and calculations to simplify your financial decisions. 

Frequently Asked Questions

Can I get a mortgage with just bank statements?

With a bank statement loan, it is possible to qualify for a mortgage with just bank statements. Bank statements are used in lieu of traditional income verification methods. Typically, 12 or 24 months’ worth of bank statements are required, but some individuals may be able to qualify based on the business’s P&L statement.

It’s also important to note that factors like your credit score will also be taken into consideration when establishing your loan terms.

How do you get bank statements for your loan?

You’ve come to the right place if you’re wondering, “Can I get a loan with bank statements?” Ultimately, you can get a bank statement mortgage loan without providing pay stubs or tax returns. All you need are your bank statements from your business or personal bank accounts.

The easiest way to get bank statements is to download them from your bank’s online portal. You should easily be able to sign in and find them. However, if for some reason you can’t, you can contact your bank and have them mailed to you.

How do bank statement loans work?

For all home loans, lenders need to verify your income before approval. In the case of bank statement loans, bank statements are used as income verification instead of W2s and your tax return. Typically, bank statement mortgage loans require 12 or 24 months’ worth of bank statements. One of our loan officers will then manually review your bank statements and verify the information with your bank.

Because of this alternative income-verification method, bank statement mortgages have become a popular option for self-employed individuals whose W2s and tax returns would not accurately reflect their full income.

Can you refinance with a bank statement loan?

Refinancing your home loan allows you to turn your home’s equity into cash in some cases. Those with existing mortgage loans may be able to refinance their loan with bank statements with a cash-out refinance or HELOAN.

This option allows you to leverage the equity in your home in exchange for cash, which you can then use to pay off debts or other major expenses. In most cases, borrowers can have a cash-out refinance loan matching up to 80% of the value of their property (or up to 85% with a HELOAN).

Can I get a bank statement mortgage for a second home?

A bank statement loan isn’t limited to just primary residences. If you’re considering purchasing a second home, and traditional income verification doesn’t reflect your true financial capabilities, a bank statement mortgage can be an ideal solution. Leveraging your bank statements to demonstrate your ability to repay the loan, you can secure that vacation home or investment property you’ve had your eye on. Investment properties can be purchased using bank statement loans for as little as 15% down payment.

What do mortgage lenders look for on bank statements?

When lenders are reviewing your bank statements to determine whether they can approve you for a loan they are looking for the following information:

  • Positive account balance
  • Little to no overdrafts
  • Regular monthly income deposits
  • Enough money to cover at least 10% down payment (10% down requires 720 minimum credit score)
  • Enough money to cover several months’ worth of mortgage payments as well as closing costs
  • When income was deposited into your account (generally, they want the income to be seasoned, meaning it’s been in your account for a while and wasn’t all just deposited right before you applied for your loan)

Eligibility for a bank statement requires total deposits minus disallowed deposits. This amount is then divided by the number of bank statements, whether it is the 12 or 24 months statement.

Another option is that if the co-borrower is a W2 employee you can use a hybrid of W2 and tax return income from the co-borrower and bank statement income from the borrower or assets from the co-borrower and bank statements from the borrower. Non-QM loans can use multiple sources of blended incomes to qualify.

Deposits which are disallowed in regards to a bank statement loan include transfers between bank accounts and cash or large deposits, which can raise a level of concern and may require a letter of explanation.

How many months’ worth of bank statements do I need for a loan?

It depends. On most of our personal and business bank statement loans, we require the last 12 or 24 months’ worth of bank statements.

What credit score do I need for a bank statement loan?

A credit score is one of the basic bank statement loan requirements for every lender.

Having a higher credit score is a good way to improve the chances of approval and keep your interest rates low on any type of mortgage including a bank statement loan. In order to qualify for bank statement loans with Griffin Funding, borrowers need a credit score of 620 or higher.

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

Yes, retirees can also qualify for bank statement loans since they are not receiving a typical stream of income that would be accurately reflected on their income tax returns.

It’s important to clarify that loans for self-employed individuals can apply to a variety of situations including those who are business owners, freelance workers, gig economy workers, and realtors.

How hard is it to get a bank statement loan?

It can be difficult to find a bank statement loan with a reliable lender. However, since these loans are based on bank statements instead of traditional income verification methods, they often open doors of opportunity for many borrowers who otherwise wouldn’t be able to qualify for a mortgage. As long as you have the bank statements to prove your income and a decent credit score, it otherwise shouldn’t be too difficult to qualify.

When it comes to getting a bank statement loan, the main hurdle is finding the right lender to work with. Our team at Griffin Funding works hard to ensure access to bank statement loans for self-employed workers of all backgrounds and industries. Many gig workers, freelancers, contractors, and other workers rely on these options to afford their homes, and our goal is to help more professionals find the right bank statement loan for their specific needs.

What is the minimum down payment on a bank statement loan?

Income is just one lending criterion you’ll need to meet to qualify for a bank statement loan. If you’re trying to learn how to get a bank statement loan, you should understand that they work like many other loans.

So whether you’re a first-time buyer or this is your second, third, or fourth time purchasing a house, you’ll need to make a down payment. Of course, there are some types of government-sponsored loans that don’t require down payments, but Non-QM loans like bank statement loans do.

How much your down payment will be primarily depends on your credit score. For example, if you have a score of 720 or higher, you may qualify for a down payment of 10%. Meanwhile, if you have a credit score of 620, you’ll need to have a down payment of at least 30%. As you can see, bank statement loan down payments vary but can be higher than a traditional mortgage down payment.

Can you get a bank statement loan if you’ve filed for bankruptcy?

You can get a bank statement loan if you’ve filed for bankruptcy, but there are a few caveats. For instance, you’ll need to wait at least two years to apply for any type of mortgage loan after bankruptcy, but there are some exceptions. For instance, mortgage lenders may be more lenient if you can afford a large down payment and higher interest rates.

Are bank statement loans more expensive?

Generally, bank statement loans are considered higher risk for lenders, so they typically come with higher interest rates and down payment requirements than traditional loans. But ultimately, it depends on the home’s purchase price and the loan amount.

Are bank statement loans riskier than other mortgage options?

Yes, bank statement loans are considered riskier than other mortgage options, especially for the lender. Since these loans are typically for self-employed borrowers who don’t have a traditional source of income and they’re not backed by Fannie Mae or Freddie Mac, they’re higher risk because they’re not guaranteed.

These loans may also be riskier for the borrower because they’re typically more expensive than conventional loans, so there’s an increased risk of defaulting on the loan. However, as long as you’re sure you can afford your monthly payments and your lender does their due diligence, there’s very little risk involved.

Interested in a bank statement loan but not sure where you stand financially? Here are some signs that you may be living beyond your means: 

  • Having a credit score below 620: Credit bureaus garner information regarding your payment history. This includes outstanding loans and credit card payments. From this information, they compile a credit score which reflects your worthiness for credit. The score is ranked from a low of 300 to a high of 850. Lenders use this score to determine whether you qualify for a loan. Typically, a credit score below 620 means that you are not financially viable enough to be approved for a loan.
  • You are saving less than 5 percent: Lenders want to see that you are not spending more than you make. If you are saving less than 5 percent of your income, then you will probably not qualify for a bank statement loan.
  • Your credit card balances are on the rise: If you are only paying the minimum due on your credit card balance and your balance is rising each month, you are not a likely candidate for a bank statement loan. To keep your debt under control, you should only charge what you can pay off each month.
  • Your house payments take up more than 28 percent of your income: If you’re spending more than 28 percent of your gross income on your mortgage payments, then you are unlikely to qualify for a bank statement loan.
  • Your total payments (house plus the minimum payments on your credit report) take up more than 50 percent of your income: If you’re spending more than 50 percent of your gross income on your mortgage payments, then you are unlikely to qualify for a bank statement loan. If you can prove that the business pays the payment then it will not be counted against you.
  • You are behind in payment of your bills: Buying items on credit and paying off the balance in installments has become a popular way to live in the U.S. Problems arise when the bills start to spiral out of control. If a large proportion of your monthly income is taken up by this type of payment plan on top of your utility bills, it is unlikely you will be eligible for a bank statement loan.

Are there other types of loans that require bank statements?

There aren’t any other loans that require bank statements, but you can use bank statements as a way to prove your income and qualify for other types of mortgages. In fact, you can use bank statements as one source of income verification for many of our Non-QM loans, such as jumbo loans and asset-based loans.

Are there other types of home loans for self-employed borrowers?

If you’re looking for a self-employed mortgage, a bank statement loan is usually the best option. However, depending on your other sources of income, such as a full-time job in addition to your self-employed business endeavors, there may be other loan options for you to consider, such as:

  • Asset-based loans: These loans convert your assets to income to determine your ability to repay the loan.
  • DSCR loans: Debt service coverage ratio (DSCR) loans are for real estate investors, focusing on rental property income rather than the borrower’s personal income.
  • VA loans: Backed by the Department of Veterans Affairs, VA loans offer military veterans and active-duty service members favorable loan terms, including no down payment requirements.
  • FHA loans: Supported by the Federal Housing Administration, these loans cater to first-time home buyers and those with lower credit scores, as they boast low down payments and flexible qualification criteria.
  • Jumbo loans: These are mortgages that exceed the conventional loan limits, tailored for high-end properties or homes in competitive real estate markets.
  • Bank statement home equity loans: Designed for self-employed individuals, these loans utilize bank statements to determine eligibility and allow homeowners to borrow against the equity built up in their property. You can check your mortgage statement for a breakdown of your outstanding balance to help you understand the equity built up in the property and use the Griffin Gold app to track your home value over time. 

Griffin Funding is proud to offer several self-employed home loan products including both personal and business bank statement loans. Whatever your employment and income circumstances, our loan officers can help find the best mortgage solution for your needs.

Infographic

Bank statement loans provide a more accessible path to home financing for those who don’t see their full income reflected on their tax returns. 

Learn more about what bank statement loans are and how they work below.