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Mbanc NMLS #38232 | Equal Housing Opportunity Lender

Step-by-Step: Preparing Your Bank Statements Before Applying

The difference between a smooth bank statement loan process and a slow, frustrating one often comes down to preparation. Here’s exactly how to prepare your statements before you call a loan officer.

Step 1 — Determine which accounts to use
Decide whether you’ll use personal statements, business statements, or both. If you deposit business revenue to your personal account regularly, personal statements may be simpler. If revenue stays in a business account, business statements may show higher gross deposits.

When in doubt: download both. Your loan officer will analyze both and tell you which produces higher qualifying income.

Step 2 — Gather complete statements — every page
The most common documentation error is submitting incomplete statements. Every page of every month must be included. A 24-month statement package for an account with 10 pages per month is 240 pages. This sounds like a lot — but modern banking apps make PDF downloads straightforward.

Most banks allow you to download monthly statements as PDFs from online banking. Go back 12 or 24 months from the most recent complete statement month.

Step 3 — Check for statement continuity
Lay out the statements month by month. No gaps. If you switched banks during the period, you need complete statements from both institutions with no missing months.

Step 4 — Identify and document large non-recurring deposits
Go through your statements and flag any deposit that was unusually large relative to your normal monthly pattern. Common items that require sourcing documentation:
– Real estate sale proceeds
– Lawsuit or insurance settlements
– Large business contracts or one-time fees
– Inheritance or gifts
– Business loan disbursements

For each large deposit, gather the sourcing documentation now. Having it ready prevents underwriting delays.

Step 5 — Identify transfers between accounts you own
Highlight every transfer between accounts you own. These will be excluded from the income calculation to prevent double-counting. Be prepared to identify which deposits are business-to-personal transfers versus independent income.

Step 6 — Request a CPA expense ratio letter (if using business statements)
Contact your accountant before applying. Ask them to prepare a letter certifying your actual business expense ratio for the statement period. Give them 5–10 business days. Most CPAs are familiar with this request. The letter should state:
– The business name and statement period covered
– The actual expense ratio as a percentage of gross revenue
– That they have completed or filed the borrower’s most recent business tax return
– CPA signature, license number, and contact information

Step 7 — Review for income consistency
Look at your average monthly deposits. If one month is dramatically higher or lower than the others, think about why. Underwriters will ask. Having the explanation ready — and documentation if possible — prevents back-and-forth delays.

Step 8 — Get a rough income estimate
Before you call a loan officer, do a rough calculation yourself:
– Total eligible deposits ÷ months = average monthly deposits
– Apply 50% for business statements (or your CPA-certified ratio)
– That’s approximately your qualifying monthly income

At 43% DTI, multiply by 0.43 to get approximate maximum monthly payment capacity. This gives you a realistic expectation of your qualifying loan range before your first call.

Common Mistakes That Cause Underwriting Delays

Missing pages: Even one missing page from one month can require a complete re-submission of that month’s statement.

Low-quality scans or PDFs: Screenshots of mobile banking apps often have resolution issues that underwriters can’t work with. Use official bank-generated PDFs.

Unexplained NSF or overdraft charges: Overdraft fees signal cash flow stress. Have an explanation ready if they appear.

Large cash deposits with no documentation: Cash-heavy businesses (restaurants, retail) should be prepared to document that cash deposits reflect business operations, not unrelated sources.

Switching accounts mid-period without disclosing it: If you moved accounts, the lender needs to see both institutions’ statements with no gap.

Frequently Asked Questions

How many months of bank statements do I need for a mortgage?

Either 12 or 24 months. Your loan officer will calculate qualifying income both ways and recommend which produces the higher result for your situation.

Do I need bank statements from all my accounts?

You need statements from accounts that reflect your qualifying income — the accounts where business revenue or self-employment income is deposited. Personal accounts used exclusively for spending (where transfers in are from another account) may not need to be included unless requested.

Can I use bank statements from multiple banks?

Yes. If your income deposits across multiple institutions, you can provide statements from all relevant banks. The lender combines the eligible deposits across all accounts.

What if I have large cash deposits in my business account?

Large cash deposits are common in businesses like restaurants, retail, and service businesses. They should be reflected in your merchant statements, cash register reports, or other business records that confirm the deposits represent business revenue.

Should I clean up my account before applying?

Don’t fabricate anything. But it is reasonable and appropriate to pay down outstanding credit card balances before applying (which reduces monthly debt obligations and improves DTI), and to make sure your deposit pattern in the most recent months reflects your current business performance.

About the Author

Mayer Dallal is the Managing Director of Mbanc (Mortgage Bank of California, NMLS #38232), a consumer-direct Non-QM lender specializing in bank statement loans, DSCR loans, and asset utilization programs for self-employed borrowers and real estate investors. Mbanc is licensed in 22 states for primary residence lending plus an additional 24 states and Washington DC for non-owner-occupied investment property financing under the business-purpose exemption.

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Mbanc NMLS #38232 | Equal Housing Opportunity Lender

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