Qualify on Your Deposits, Not Your Tax Return Alone.
A bank statement loan reviews the income that actually reaches your accounts. It is built for business owners, contractors and freelancers whose tax returns understate what the business produces. Here is how the deposit review works and what to prepare before you apply.
Business deductions lower a tax return on purpose. A bank statement review looks at deposits instead, then reviews the rest of the file the same way any mortgage is reviewed.
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Income From Deposits
Qualifying income is reviewed from a consecutive run of personal or business bank statements. Tax returns are usually not used for the income calculation.
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Built for Business Owners
Sole proprietors, LLC and corporation owners, contractors, freelancers and 1099 earners with an established business and a consistent deposit history.
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Personal or Business Accounts
Personal and business statements are reviewed differently. Business statements carry an allowance for the expenses the business pays. The method is set by the program reviewed for your file.
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Purchase, Refinance or Cash-Out
Bank statement income can support a purchase, a rate-and-term refinance or a cash-out request. Each is a different review with its own numbers.
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Occupancy and Property Type Matter
Primary residence, second home or rental; single-family, condo, townhome or small multi-unit. Tell us early, because the answer changes which programs can be considered.
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Prepared Files Move Faster
Every page of every statement for the requested months, organized by account, is the single most useful thing you can bring. The checklist below tells you what else to gather.
Before the Conversation
What Shapes a Bank Statement Review
Two reviews happen side by side: the deposit review that produces qualifying income, and the rest of the file that any mortgage needs.
The Deposit Review
What the Reviewer Looks At
A consecutive run of recent statements, every page, for each account used
Deposits that come from the business versus transfers, refunds and one-time items
How long you have owned the business and what share you own
Whether the accounts are personal, business or mixed
Seasonality, large unusual deposits and any declining trend
Gross deposits are not qualifying income. Transfers and one-time deposits are identified first, and business statements then carry an expense allowance set by the program. Ask how your deposits will be treated before you count on a number.
The Rest of the File
Reviewed for Your File
Credit history and how your current housing payment has been paid
Assets for the down payment, closing costs and reserves after closing
The property, its type, its value and how you will occupy it
The loan purpose: purchase, rate-and-term or cash-out
What This Page Does Not Quote
Minimum credit scores, down payments, loan-to-value caps or reserve amounts
Rates, fees or an expense factor percentage
A closing date
Those terms come from the program selected for your file and change with the property and the loan purpose. Ask for them in writing and compare them before you decide.
Bank Statement Refinance
Refinance or Take Cash Out Without Tax-Return Income
If your current loan was underwritten on a tax return that no longer tells the story, a bank statement refinance reviews your deposits instead. A rate-and-term refinance and a cash-out refinance are different requests, so say which one you mean.
Rate-and-term or cash-out requests reviewed on deposit income
Refinance from a conventional, FHA, VA or another non-QM loan
Debt payoffs listed separately so you can see what actually changes
Primary residence, second home or rental, each reviewed on its own terms
Equity, approved loan and cash at closing kept as three separate numbers
Estimated equity is your value estimate minus what you owe. It is a starting point, not an appraisal.
Approved loan is what a lender agrees to lend after the appraisal, the deposit review and current program terms.
Cash at closing is what remains after the new loan pays your existing liens and the costs charged against the proceeds.
Consolidating debt into a mortgage can lower the monthly total while costing more over time and secures that debt against your home. Compare both numbers. Strong liquid assets but modest deposits? See the Asset Depletion Loan.
Bank Statement Purchase
Buy a Home on the Income Your Business Produces
Legitimate deductions should not keep you from buying. A bank statement purchase reviews your deposits for income and the rest of the file for everything else. Bring the statements first and the price range second.
Primary residence, second home and investment purchases reviewed
Single-family, condo, townhome and small multi-unit properties considered
Down payment and reserves sourced from documented assets
Gift funds reviewed under the program's documentation rules
A written estimate before you write an offer, not after
Have these ready and the review starts the day you send them:
✓ Every page of every statement for the months requested, for each account
✓ Business license, entity documents or other proof of self-employment
✓ A letter from your CPA or tax preparer if the program requests one
✓ Asset statements for the down payment, closing costs and reserves
✓ Explanations for transfers, large deposits or gaps you already know about
Why Gross Deposits and Eligible Deposits Are Different Totals
An arithmetic illustration only. The dollar figures are assumed to show the subtraction, not to describe any program, borrower or result.
Line Item (12 statements, one business account)
Illustrated Amount
Why It Matters
Total deposits shown on the statements
$240,000
The gross figure most people start from
Less: transfers in from your own other accounts
−$36,000
Moving money is not income
Less: one-time sale of equipment
−$14,000
Non-recurring deposits are set aside
Eligible deposits
$190,000
What the review averages
Average eligible deposits per month
$15,833
$190,000 ÷ 12, before any expense allowance
What Happens Next Is Program-Specific
On business statements the program then applies its expense allowance, which may be a standard method or one supported by your CPA or tax preparer. That step turns eligible deposits into qualifying income, and it is why this page does not quote a percentage. Two borrowers with the same deposits can arrive at different qualifying income.
Illustration only. It is not an income calculation, an approval, a quote or a description of any program's method. Your statements, accounts and business decide the actual figures.
Choosing the Path
Bank Statement vs. the Tax-Return Path
The right path is the one that documents your income truthfully and supports the payment at the lowest cost. Sometimes that is still a tax-return loan.
Bank Statement
Tax-Return Path (Conventional, FHA, VA)
Income documentation
Consecutive bank statements
Tax returns, W-2s or 1099s, pay stubs
Business deductions
Do not reduce the deposits reviewed
Reduce the income that can be used
Expense treatment
Program allowance on business statements
Already reflected in the return
Pricing
Reviewed for your file; often priced differently from agency loans
Agency pricing, reviewed for your file
Credit, assets, property
Reviewed the same way
Reviewed the same way
Best starting question
Does the tax return understate the cash the business produces?
No program terms are quoted in this table. Both paths are reviewed for your file.
Payment Arithmetic
Estimate a Monthly Payment on Your Own Numbers
Enter a loan amount, a rate you want to test, taxes and insurance. The result is arithmetic on your entries, not a quote, an approval or a statement of what you qualify for.
Your assumption. The program sets the actual requirement.
Your entry, not a quote
Your estimate, not an appraisal
An assumption. The approved loan depends on the appraisal and the program.
Arithmetic on the numbers you entered. The rate is your test rate, not a quote. A lower monthly total can still cost more over a longer term, and paying off other debt with a mortgage secures it against your home. Not an approval.
The Process
What the Process Looks Like
The sequence is the same for a purchase and a refinance. The deposit review is the step most often slowed by missing pages.
1
Share the Business, the Goal and the Property
Start here
Tell us how the business is organized and paid, whether you are buying or refinancing, and where the property is. That is enough for us to say which months and which accounts the deposit review needs.
2
Deposit Review and Written Estimate
Your statements
We identify transfers and one-time deposits, apply the program's method to the eligible deposits and put the resulting qualifying income and the program terms in writing for you to compare.
3
Appraisal, Underwriting and Conditions
Full file
The appraisal is ordered, title work begins and an underwriter reviews the complete file. Expect questions about specific deposits; answering them quickly is what keeps the file moving.
4
Closing
Signing
You sign the final documents. On a refinance of your primary residence, federal law provides a three-business-day rescission period before funds disburse. On a purchase, the keys follow funding.
Frequently Asked Questions
Bank Statement Loan FAQs
Straight answers about the deposit review, documentation and how bank statement lending compares with a tax-return loan.
Texana Bank Mortgage uses a soft credit inquiry for the initial review, which does not affect your credit score. A hard inquiry only occurs later if you move forward with a full application.
A bank statement loan is a mortgage where qualifying income is reviewed from deposits into your personal or business bank accounts instead of from tax returns and W-2s. It exists for business owners, contractors and other self-employed borrowers whose tax returns understate the cash their business actually produces. The rest of the file, including credit, assets, property and title, is still reviewed.
Self-employed borrowers with an established business and a consistent deposit history: sole proprietors, LLC and corporation owners, independent contractors, freelancers and 1099 earners. Tell us how long you have owned the business and how it is paid. Program options depend on the complete file, not on the label alone.
Programs review a consecutive run of recent statements, commonly a year or two depending on the program selected for your file. Bring what you have. We will tell you which months and which accounts the review needs before you gather anything else.
Personal statements are reviewed for the business income that actually reaches you. Business statements are reviewed with an allowance for the expenses the business pays, so eligible deposits and qualifying income are different numbers. The method, and any percentage used, is set by the program reviewed for your file and may be supported by a letter from your CPA or tax preparer. This page does not quote an expense factor.
No. Transfers between your own accounts, one-time deposits such as an asset sale or a refund, borrowed funds and deposits that are not from the business are typically identified and excluded before an average is calculated. The arithmetic illustration on this page shows why gross deposits and eligible deposits are different totals.
Tax returns are usually not used to calculate income on a bank statement loan. The program may still require other documents about your business and taxes, such as a business license, entity documents or a letter from your tax professional. We will list exactly what applies to your file.
Those terms are set by the program reviewed for your file and by the property, occupancy and loan purpose, so this page does not quote a minimum. Ask for the written terms that apply to you and compare them before you count on a number.
Purchase, rate-and-term refinance and cash-out refinance requests can all be reviewed using bank statement income. For a cash-out request, keep three numbers separate: your estimated equity, the loan a lender approves and the cash left after payoffs and costs. Ask for a written comparison that shows all three.
Occupancy and property type change the programs that can be considered, so tell us early whether the home is your primary residence, a second home or a rental, and whether it is a single-family home, condo, townhome or small multi-unit property.
Tell us about both. Some programs review wage income from pay stubs alongside business income from deposits; others use one source. Which approach fits depends on the program and on how each income is documented.
Give us the dates and the type of event. Waiting periods and re-established credit requirements are program-specific, and the lender must determine what applies to your file. An article cannot do that for you.
The deposit review is the step that most often adds time, so having every statement page for the requested months organized before you apply is the most useful thing you can do. After that, the appraisal and underwriting follow the same sequence as other mortgages. We do not promise a closing date on a web page.
Not automatically. If your tax-return income supports the payment, a conventional, FHA or VA loan may cost less. Bank statement lending helps when legitimate business deductions leave the tax return well below the cash the business produces. Compare the documentation path, the cost and the loan purpose before choosing. Our self-employed mortgage options guide walks through that comparison.
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Start With the Statements
Send the statements and tell us the goal. We will say which months matter, how your deposits will be treated and what the program terms are, in writing, before you count on anything.
