What Is a Bank Statement Refinance Loan?

A bank statement cash-out refinance operates on the same principle as a standard cash-out refinance, where you secure a loan exceeding your current mortgage balance, use those funds to pay off your existing mortgage, and keep the remaining funds for other purposes. Like a self-employed home equity loan, a bank statement cash-out refinance enables you to leverage your home equity and get much-needed funds. However, what distinguishes a bank statement cash-out refinance is its unique approach to income verification.

Traditionally, mortgage lenders rely on tax returns or pay stubs to assess a borrower’s income and determine their eligibility for refinancing. Yet, for self-employed individuals or those with irregular income streams, providing such documentation can be challenging or may not accurately reflect their finances. This is where the bank statement cash-out refinance shines.

Rather than relying solely on tax returns or pay stubs, this refinancing option allows borrowers to qualify by demonstrating their income through a series of bank statements. These bank statements provide a comprehensive view of the borrower’s financial activity over a specified period, offering lenders insights into their income stability and capacity to manage debt.

For self-employed borrowers, who may not have consistent pay stubs or traditional employment records, the ability to use bank statements as proof of income can be invaluable. By leveraging their bank statements, borrowers can unlock opportunities to consolidate debt, invest in home improvements, or pursue other financial goals while benefiting from competitive mortgage rates.

Who Are Bank Statement Refinance Loans for?

Bank statement refinance loans cater primarily to self-employed individuals and business owners who may face challenges in documenting their income through traditional means such as tax returns or pay stubs. However, they also serve a broader spectrum of individuals with non-traditional income sources, including:

  • Consultants: Individuals providing specialized services on a contract basis, often with varying income streams.
  • Contract Workers: Those engaged in temporary or project-based work arrangements, whose income may fluctuate.
  • Independent Contractors: Freelancers or individuals who work independently for various clients or projects, with income patterns that may be irregular.
  • Sole Proprietors: Owners of small businesses who operate as the sole owners, responsible for managing all aspects of their business, including finances.
  • Gig Economy Workers: Individuals participating in the gig economy, such as ride-sharing drivers, delivery couriers, or freelance workers in various industries.
  • Realtors: Real estate professionals who may earn income from commissions, which can vary based on market conditions and sales activity.
  • Entrepreneurs: Individuals who have launched their own businesses or startups, often experiencing fluctuations in income during the early stages of business development.
  • Retirees: Those who may have retired from traditional employment but continue to earn income from investments, rental properties, or part-time work.

Bank statement refinance loans offer these individuals an alternative path to accessing mortgage refinancing opportunities by allowing them to use their bank statements as proof of income. If you fall into any of these categories and are looking into a loan, use a bank statement loan calculator to find out whether you qualify.

Pros and Cons of a Bank Statement Refinance Loan

Here are some pros and cons associated with bank statement cash-out refinance loans:


  • Accessibility: Bank statement refinance loans offer a viable option for self-employed individuals and others with non-traditional income sources who may struggle to qualify for conventional loans requiring standard income documentation.
  • Flexibility: Borrowers can use their bank statements to demonstrate income, providing a more accurate reflection of their financial situation over time, which may better align with their actual earning potential.
  • Higher Loan Amounts: With the ability to qualify based on bank statements, borrowers may be eligible for higher loan amounts compared to traditional refinancing options, allowing them to access more of their home equity.
  • Debt Consolidation: Bank statement cash-out refinance loans enable borrowers to consolidate high-interest debt, such as credit cards or personal loans, into a single payment, potentially at a lower interest rate.
  • Investment Opportunities: Borrowers can use the cash-out proceeds from the refinance to invest in home improvements, business ventures, or other investment opportunities that can potentially yield a higher return.


  • Self-Employment Requirement: In order to qualify for a bank statement cash-out refinance loan, borrowers must be self-employed for at least two years.
  • Documentation Requirements: While bank statements replace traditional income documentation, borrowers still need to provide detailed financial records, which can be time-consuming and require meticulous organization.
  • Potential Fees: Like any mortgage refinance, bank statement refinance loans may come with closing costs and fees, including appraisal fees, origination fees, and other closing costs that borrowers need to consider.
  • Risk of Overleveraging: Accessing home equity through a cash-out refinance carries the risk of overleveraging, particularly if the funds are used for non-essential expenses or speculative investments, which could strain borrowers’ financial stability.

For those seeking a streamlined approach to managing their finances, leveraging tools like the Griffin Gold app can help borrowers track their expenses, compare financing options, and stay organized throughout the loan application process.

Bank Statement Refinance Loan Requirements

Bank statement refinance loans typically have specific requirements tailored to accommodate borrowers with non-traditional income sources. While these requirements may vary among lenders, here’s a general overview:

  • Proof of Income: Instead of traditional income documentation like tax returns or pay stubs, borrowers will need to provide bank statements covering a specified period, typically ranging from 12 to 24 months. These bank statements should show consistent deposits and cash flow to demonstrate the borrower’s ability to repay the loan.
  • Credit Score: Lenders will assess the borrower’s creditworthiness by reviewing their credit score. Griffin Funding can work with borrowers who have a credit score as low as 620, but keep in mind that a higher credit score will lead to more favorable rates and terms. 
  • Debt-to-Income (DTI) Ratio: Lenders evaluate the borrower’s debt-to-income ratio, which compares their monthly debt obligations to their gross monthly income. For BSL cash-out refinance loans, Griffin Funding accepts borrowers with a DTI ratio of up to 50%. 
  • Self-Employed: Borrowers must be self-employed for at least two years in order to qualify for a bank statement cash-out refinance. In some cases, we can work with borrowers who have been self-employed for one year but have worked in the same field or industry for two or more years. 
  • Property Appraisal: Lenders require a professional appraisal of the property to determine its current market value. This appraisal helps determine the maximum loan amount and ensures that the property serves as adequate collateral for the loan.
  • Closing Costs: While cash-out refinances do not require a down payment, borrowers should factor in closing costs, which typically include fees for appraisal, title search, loan origination, and other closing-related expenses. These costs can vary but generally range from 2% to 5% of the loan amount.
  • Equity Requirements: Borrowers must have sufficient equity in their home to qualify for a cash-out refinance. Lenders typically require a minimum amount of equity to qualify, often ranging from 20% to 30% of the home’s appraised value after the refinance.

Meeting these requirements can increase the likelihood of loan approval and help borrowers secure favorable terms and interest rates for their Bank Statement Refinance Loan.

Refinance Your Home Loan as a Self-Employed Individual

If you’re a self-employed individual looking to refinance your home loan, Griffin Funding has tailored solutions to meet your unique needs. With our bank statement loan (BSL) cash-out refinance, self-employed borrowers can qualify based on bank statements rather than traditional income documentation. This streamlined process acknowledges the fluctuating income often associated with self-employment, making it easier to access the equity in your home and achieve your financial goals.

In addition to BSL cash-out refinances, Griffin Funding offers a range of options, including non-QM loans designed for borrowers who may not meet traditional lending standards. Our non-QM loans provide flexibility and personalized solutions, making homeownership attainable for those with unconventional income sources.

For self-employed individuals seeking a mortgage, Griffin Funding offers specialized self-employed mortgage programs tailored to your unique financial situation. Whether you’re a consultant, freelancer, or small business owner, our self-employed mortgage options provide the flexibility and understanding you need to secure financing for your dream home.

Don’t let the complexities of self-employment hinder your homeownership or financial goals. Take advantage of Griffin Funding’s expertise and tailored solutions to refinance your home loan with confidence. Apply now and experience the ease and convenience of working with a lender that understands your unique needs as a self-employed individual.