Frequently Asked Questions
What exactly is a bank statement loan?
A bank statement loan is a Non-QM mortgage that verifies income using 12 or 24 months of bank deposits rather than tax returns. It is designed for self-employed borrowers whose tax returns significantly understate their real income due to legitimate business deductions.
Who qualifies for a bank statement loan?
Self-employed business owners, independent contractors, 1099 workers, and small business owners with at least 2 years of self-employment history, a 620+ credit score, and consistent bank deposit history. Trades workers — electricians, plumbers, carpenters — are among the most common bank statement borrowers.
How is income calculated on a bank statement loan?
Total deposits over 12 or 24 months are divided by the number of months to produce average monthly gross income. A 50% expense ratio is typically applied to business accounts. A CPA letter documenting a lower actual expense ratio can increase qualifying income.
How much higher is the rate on a bank statement loan?
Typically 0.25% to 0.875% above comparable conventional rates, depending on credit score, LTV, and loan amount. Well-qualified borrowers with 700+ credit often see spreads at the lower end of that range.
Can I use a bank statement loan to buy an investment property?
Yes. Bank statement loans are available for primary residences, second homes, and investment properties. Down payment requirements are typically higher for investment properties (20–25%).
Can I use a bank statement loan for a cash-out refinance?
Yes. Bank statement loans are available for purchase, rate-and-term refinance, and cash-out refinance. The cash-out option is particularly useful for self-employed tradespeople who want to access home equity for business growth.
Do I need to stop writing off business expenses to qualify?
No. A bank statement loan is specifically designed so you do not have to reduce your legitimate business deductions. The loan qualifies on your real deposit income, not your tax-optimized net income.
Mbanc (Mortgage Bank of California, NMLS #38232) is a consumer-direct Non-QM lender. This content is for informational purposes only and does not constitute a commitment to lend. All loans subject to credit approval.
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Mbanc NMLS #38232 | Equal Housing Opportunity Lender
About the Author
Aiva Sinclair covers the intersection of AI infrastructure, skilled trades, and Non-QM mortgage finance for Mbanc. Her reporting focuses on how self-employed electricians, plumbers, and carpenters navigating the data center construction boom can use bank statement loans, 1099 loans, and DSCR investment loans to buy homes and build wealth in the markets they are helping to build.
Contact: sales@mbanc.com | mbanc.com/non-qm-trades
