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Self-Employed Mortgage Qualification Using Two Years of Bank Statements
A 24 month bank statement loan in Utah may allow a qualified self-employed borrower to establish mortgage qualifying income using eligible deposits from approximately two years of personal or business bank statements instead of relying primarily on taxable income shown on traditional tax returns.
For business owners, entrepreneurs, independent contractors and other self-employed borrowers, reviewing 24 months can provide a broader picture of recurring business cash flow. It may be particularly useful when income varies from month to month or the business experiences seasonal revenue.
Daniel Paris with UtahLowRate.com helps self-employed borrowers compare bank statement mortgage programs available through wholesale lending sources throughout Utah.
Daniel Paris — Utah Mortgage Broker
NMLS #243976
Call: 801-604-4949
Quick Answer: A 24 month bank statement mortgage generally evaluates eligible deposits over approximately 24 months to help establish qualifying self-employment income. Depending on the program, personal or business statements may be permitted. Transfers and other non-income deposits generally must be identified, and business accounts may require an applicable expense calculation. Credit, LTV, reserves, property, occupancy and complete underwriting requirements also apply.
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24 Month Bank Statement Loan Utah Quick Facts
| Feature | General 24-Month Bank Statement Structure |
|---|---|
| Primary borrower | Self-employed borrower |
| Income documentation | Eligible bank deposits |
| Review period | Commonly approximately 24 months |
| Personal statements | May be permitted |
| Business statements | May be permitted |
| Traditional tax-return income | May not be primary qualification method |
| Business expense analysis | Generally applicable to business statements |
| Purchase | May be available |
| Rate-and-term refinance | May be available |
| Cash-out refinance | May be available |
| Primary residence | May be available |
| Second home | Select programs |
| Investment property | Select programs |
| Jumbo loans | Select programs |
| Credit requirements | Investor specific |
| Maximum LTV | Program and borrower specific |
| Reserves | Often required |
| Final approval | Complete lender underwriting required |
Mortgage programs and underwriting guidelines vary by lender and investor and can change. These are general educational concepts, not universal loan terms.
What Is a 24 Month Bank Statement Loan?
A 24 month bank statement loan is an alternative-documentation mortgage designed primarily for qualifying self-employed borrowers.
Instead of determining income primarily from W-2 wages or the taxable income reported on federal tax returns, the lender may analyze eligible recurring deposits appearing on approximately two years of bank statements.
The objective is not simply to total every deposit.
The lender must determine which deposits represent legitimate recurring income and which transactions should be excluded from the income calculation.
Potential exclusions can include:
- Transfers between accounts
- Loan proceeds
- Refunds
- Reimbursements
- Asset-sale proceeds
- Duplicate deposits
- Unusual one-time transactions
- Deposits that cannot be adequately documented
- Other transactions that do not represent recurring income
For a complete overview of alternative deposit-based financing, visit the Bank Statement Loans Utah hub.
How Do 24 Month Bank Statement Loans in Utah Work?
The process generally starts by collecting the applicable consecutive bank statements.
The lender or mortgage program then evaluates the statements according to its underwriting methodology.
Step 1: Review the Bank Statements
The applicable personal or business accounts are reviewed over the required period.
For a 24-month program, that will commonly mean approximately 24 consecutive monthly statements.
Step 2: Identify Eligible Deposits
Deposits that potentially represent recurring business or self-employment revenue are identified.
Step 3: Remove Non-Income Transactions
Transfers, loan proceeds and other transactions that do not represent qualifying recurring income generally need to be removed or addressed.
Step 4: Determine Average Deposits
Eligible deposits are generally totaled and divided by the applicable number of months.
Step 5: Apply the Required Expense Methodology
If business bank statements are being used, the applicable program may require an expense factor or another approved method of determining the portion of business revenue available as qualifying borrower income.
Step 6: Complete Mortgage Underwriting
Income is only one part of the mortgage decision.
The lender must also evaluate applicable requirements involving credit, assets, reserves, liabilities, property, appraisal, occupancy, loan amount, loan-to-value and other underwriting factors.
For a detailed documentation checklist, see Bank Statement Loan Requirements Utah.
How Is Income Calculated With 24 Months of Bank Statements?
A simplified calculation begins by determining the total eligible deposits during the review period.
For example:
Eligible deposits during 24 months: $720,000
Divide that amount by 24:
$720,000 ÷ 24 = $30,000 average eligible monthly deposits
Request a Bank Statement Income Review
If the applicable program's approved methodology results in 50% of those deposits being treated as qualifying income in this hypothetical example:
$30,000 × 50% = $15,000 estimated monthly qualifying income
That would produce:
$180,000 estimated annual qualifying income
This is only an illustration.
A lender's actual calculation can differ substantially based on the account type, business structure, deposit history, expense methodology and investor requirements.
Use our Bank Statement Loan Income Calculator for a more detailed explanation.
Why Would a Lender Review 24 Months Instead of 12?
A two-year review provides more history.
That can help an underwriter evaluate whether deposits appear stable, recurring and representative of the borrower's business.
A 24-month history may be particularly relevant for businesses with:
- Seasonal revenue
- Variable monthly income
- Commission-based income
- Project-based revenue
- Uneven customer payment cycles
- Periods of unusually high or low deposits
- Significant year-to-year changes
- Businesses where a longer history better demonstrates normal cash flow
A longer period can reduce the influence of one unusually strong or unusually weak month.
However, that does not mean 24 months is automatically better.
12 Month vs. 24 Month Bank Statement Loans Utah
One of the most important decisions for a self-employed borrower is whether an available 12-month or 24-month program produces the stronger qualifying profile.
| Factor | 12-Month Program | 24-Month Program |
|---|---|---|
| Review period | Shorter | Longer |
| Recent business performance | More heavily represented | Blended with prior year |
| Seasonal fluctuations | Less historical smoothing | More historical smoothing |
| Increasing income | Recent growth may have greater influence | Earlier lower deposits may affect average |
| Declining income | Recent decline more visible | Longer history available for analysis |
| Documentation | Approximately 12 months | Approximately 24 months |
| Availability | Investor specific | Investor specific |
A borrower whose business has grown rapidly may produce a different average using 12 months than 24 months.
Conversely, a business with substantial seasonal fluctuations may benefit from having a longer history available for evaluation.
Neither approach should be selected solely because it produces the highest mathematical average. The selected program must permit the documentation method and the lender must determine that the income is acceptable under its guidelines.
Compare the dedicated 12 Month Bank Statement Loans Utah guide before deciding which approach fits your situation.
Personal vs. Business Bank Statements
A 24 month bank statement mortgage in Utah may potentially use personal statements, business statements or another eligible structure, depending on the lender.
Personal Bank Statements
With an eligible personal-bank-statement program, recurring deposits related to the borrower's self-employment may be evaluated under the program's rules.
The lender still needs to distinguish legitimate recurring income from transfers and other non-income transactions.
Business Bank Statements
Business accounts require additional analysis because gross business revenue is not necessarily the same as the borrower's personal qualifying income.
Businesses have expenses.
For that reason, the applicable lender may use an expense factor or another permitted method for estimating qualifying income from business deposits.
The exact methodology varies by program.
Do 24 Month Bank Statement Loans Require Tax Returns?
Certain bank statement mortgage programs are specifically designed so that eligible bank deposits, rather than traditional tax-return income calculations, can serve as the primary method of establishing qualifying income.
That does not make the mortgage a no-documentation loan.
Bank statement mortgages are fully underwritten.
Depending on the program and circumstances, additional documents may be required to establish self-employment, business ownership, assets, reserves and other aspects of the loan.
Borrowers should therefore avoid assuming that “no tax returns for income qualification” means “no documentation.”
It does not.
Who May Benefit From a 24 Month Bank Statement Mortgage?
A 24-month program may be worth evaluating for qualifying:
- Small-business owners
- Entrepreneurs
- Independent contractors
- Consultants
- Real estate professionals
- Medical professionals
- Attorneys
- Restaurant owners
- Construction professionals
- Tradespeople
- Freelancers
- Commission-based self-employed professionals
- Online business owners
- Business owners with seasonal revenue
The important issue is not the borrower's profession.
It is whether the borrower meets the applicable program's self-employment, income, credit, asset, property and underwriting requirements.
24 Month Bank Statement Loans for Seasonal Businesses
Seasonality is one reason a 24-month review can be useful.
Consider a Utah business that earns substantially more revenue during part of the year.
Looking at only a few months could create a distorted picture.
Twenty-four months can show two annual cycles and may provide an underwriter with a better view of normal business activity.
Examples could include businesses affected by:
- Ski season
- Tourism
- Construction cycles
- Landscaping seasons
- Holiday sales
- Summer recreation
- Real estate transaction cycles
- Agricultural cycles
The lender still determines whether the historical deposits provide acceptable evidence of stable qualifying income.
What Happens if My Business Income Increased?
An upward trend can create an important 12-month-versus-24-month decision.
Suppose eligible deposits were significantly lower during the first year and substantially higher during the most recent year.
A straight 24-month average would naturally include both periods.
A 12-month calculation could produce a higher recent average, but the borrower must qualify for a program that permits that documentation period.
Lenders may also have requirements concerning income stability and trends.
This is why a preliminary analysis should compare the available documentation options rather than automatically choosing 12 or 24 months.
What if Deposits Are Declining?
Declining deposits deserve careful review.
A historical average does not necessarily mean a lender will ignore a meaningful downward trend.
The lender may analyze whether the income being used appears reasonable and sustainable under its guidelines.
Borrowers should provide accurate statements and should not assume that older, stronger deposits will automatically overcome substantially weaker recent business activity.
Credit, Down Payment and LTV
Using bank statements to establish income does not eliminate normal mortgage risk analysis.
A lender may evaluate:
- Credit score
- Credit history
- Mortgage history
- Loan amount
- Down payment
- Property equity
- Loan-to-value ratio
- Occupancy
- Property type
- Reserves
- Assets
- Business history
- Income stability
- Overall borrower profile
Stronger credit and greater equity may provide access to different program options than a transaction involving higher LTV or weaker credit.
There is no single universal LTV or credit-score requirement for every 24 month bank statement loan.
24 Month Jumbo Bank Statement Loans Utah
Bank statement financing can also be important for self-employed borrowers purchasing higher-value Utah homes.
Traditional jumbo underwriting can become difficult when a successful business owner has substantial cash flow but reports lower taxable income because of legitimate business deductions.
Select alternative-documentation investors may offer jumbo bank statement financing.
Jumbo transactions can place additional emphasis on:
- Loan amount
- Property value
- Credit
- LTV
- Liquidity
- Reserves
- Deposit history
- Business stability
- Occupancy
- Property characteristics
Borrowers purchasing higher-value properties should compare Utah Jumbo Loans and available bank statement jumbo options rather than assuming the same guidelines apply to every lender.
Purchase, Refinance and Cash-Out Options
Purchase
Qualified self-employed borrowers may potentially use a 24 month bank statement mortgage to purchase an eligible Utah home.
Completing a preliminary bank statement income analysis before making an offer can help determine how the lender may view the borrower's deposits.
Rate-and-Term Refinance
Eligible borrowers may also use bank statement financing to refinance an existing mortgage under applicable program guidelines.
Cash-Out Refinance
Certain bank statement programs permit cash-out refinancing.
Maximum LTV, credit, seasoning, reserves and other requirements can differ from purchase or rate-and-term transactions.
Bank Statement Loan vs. DSCR Loan
Self-employed real estate investors should understand the difference between these programs.
| 24 Month Bank Statement Loan | DSCR Loan |
|---|---|
| Focuses primarily on borrower income | Focuses primarily on property rental cash flow |
| Uses eligible bank deposits | Uses qualifying rental income |
| Designed primarily for self-employed borrowers | Designed primarily for real estate investors |
| May potentially finance a primary residence | Generally investment-property financing |
| Business income is central | Property economics are central |
If you are buying or refinancing a rental property, start with our DSCR Mortgage Loans Utah guide.
Utah DSCR Resource Center
Real estate investors can also review:
- DSCR Loan Requirements Utah
- DSCR Loan Rates Utah
- DSCR Loan Calculator Utah
- DSCR Loan FAQ Utah
- DSCR Cash-Out Refinance Utah
- No-Ratio DSCR Loans Utah
- DSCR Loans for Short-Term Rentals Utah
- DSCR Loan Credit Score Utah
- DSCR Loan Down Payment Utah
- DSCR Loan LTV Utah
- DSCR Loans for LLCs Utah
- Interest-Only DSCR Loans Utah
- DSCR Purchase Loans Utah
- DSCR Refinance Loans Utah
- DSCR vs. Conventional Investment Loan Utah
- DSCR Loans Salt Lake City Utah
- DSCR Loans Park City Utah
- DSCR Loans St. George Utah
These programs address different qualification problems. A borrower should compare the documentation method that fits both the property and the borrower's financial profile.
24 Month Bank Statement Loans Throughout Utah
UtahLowRate.com works with qualifying self-employed borrowers throughout Utah.
Salt Lake City and Salt Lake County
Business owners in Salt Lake City, Holladay, Millcreek, Murray, Cottonwood Heights, Sandy, Draper, South Jordan, West Jordan, Riverton, Herriman, Bluffdale, Midvale and surrounding communities may consider bank statement financing when traditional tax-return income does not accurately represent recurring business cash flow.
Utah County
Bank statement mortgage options may be available to qualifying self-employed borrowers in Provo, Orem, Lehi, Alpine, Highland, American Fork, Pleasant Grove, Saratoga Springs, Eagle Mountain and Spanish Fork.
See Bank Statement Loans Utah County and Lehi.
Park City and the Wasatch Back
Higher property values can make the combination of alternative income documentation and jumbo underwriting particularly important around Park City, Deer Valley, Canyons Village, Old Town, Kimball Junction, Promontory, Heber City, Midway, Jordanelle, Kamas and Hideout.
See Bank Statement Loans Park City Utah and Bank Statement Loans Heber City Utah.
St. George and Southern Utah
Self-employed borrowers purchasing or refinancing homes in St. George, Washington, Ivins, Santa Clara, Hurricane and surrounding Washington County communities may also evaluate bank statement mortgage programs.
See Bank Statement Loans St. George Utah.
Documents to Prepare
Documentation varies by investor, but borrowers considering a 24 month bank statement mortgage should generally be prepared to discuss or provide applicable documentation concerning:
- Approximately 24 consecutive bank statements
- Self-employment history
- Business ownership
- Business entity information when applicable
- Identification
- Assets needed for closing
- Mortgage reserves
- Property information
- Purchase contract when applicable
- Existing mortgage information for refinances
- Explanations or documentation for unusual deposits when required
- Other documents requested by the lender
Preparing complete statements can make the preliminary review more efficient.
Frequently Asked Questions About 24 Month Bank Statement Loans Utah
What is a 24 month bank statement loan?
A 24 month bank statement loan is an alternative-documentation mortgage that may allow an eligible self-employed borrower to establish qualifying income using eligible deposits shown on approximately two years of personal or business bank statements.
Are 24 months of statements better than 12 months?
Not automatically. A 24-month history may provide a broader view of business cash flow and seasonal income, while a 12-month program may place greater emphasis on recent performance. Program availability and underwriting requirements determine which approach can be used.
Can I use business bank statements?
Potentially. Many bank statement mortgage programs permit qualifying business statements, but an applicable business-expense methodology generally needs to be considered.
Can I use personal bank statements?
Certain programs permit personal bank statements when the borrower and deposits satisfy the lender's requirements.
Are transfers counted as mortgage income?
Moving money between accounts generally does not create additional income. Lenders review transfers and other non-income deposits to prevent the same revenue from being counted more than once.
Can I qualify without using tax-return income?
Certain alternative-documentation programs may use eligible bank deposits as the primary method of determining qualifying income. Other underwriting and documentation requirements still apply.
Can I get a jumbo loan using 24 months of bank statements?
Potentially. Select mortgage investors offer jumbo bank statement programs for qualifying self-employed borrowers, subject to loan amount, credit, LTV, reserves, property and other requirements.
Can I refinance using 24 months of bank statements?
Potentially. Rate-and-term and cash-out bank statement refinance programs may be available, subject to lender requirements.
Are 24 month bank statement loans available for primary residences?
Certain programs permit eligible owner-occupied primary residences. Second-home and investment-property options may also exist under select programs.
How do I know whether I should use 12 or 24 months?
The best approach is to calculate the potential qualifying income both ways and then determine which available mortgage programs permit the applicable documentation method for your credit, LTV, property, occupancy and loan amount.
Get a 24 Month Bank Statement Loan Review in Utah
If you are self-employed, the first question should not simply be:
“How much money did my business deposit?”
The more useful question is:
“How much of my recurring deposit history may qualify as mortgage income under an available bank statement program?”
Daniel Paris can review your scenario and compare available 12-month, 24-month and other self-employed mortgage options.
Daniel Paris
Utah Mortgage Broker
UtahLowRate.com
NMLS #243976
801-604-4949
Start Your Mortgage Review
Visit Apply Now or call 801-604-4949 to discuss your bank statement mortgage scenario.
Important Disclosure: Mortgage programs, rates, credit requirements, LTV limits, reserve requirements, income calculations, loan amounts and documentation requirements vary by lender and investor and are subject to change. Examples on this page are educational and do not represent a commitment to lend, approval, pre-approval or guarantee of loan terms. Final eligibility is determined through complete lender underwriting. Equal Housing Opportunity.
Request a Bank Statement Income Review · Call Daniel Paris: 801-604-4949
