What Do You Need to Qualify for a Bank Statement Mortgage?

Bank statement mortgage requirements vary among investors, but qualifying generally involves much more than simply providing copies of bank statements.

A lender must evaluate income, credit, assets, liabilities, reserves, property, occupancy, loan purpose and overall borrower risk.

For self-employed borrowers, the key difference is how qualifying income may be documented.

Quick Answer

A qualifying bank statement loan commonly requires 12 or 24 months of eligible personal or business bank statements, evidence of self-employment, acceptable credit, sufficient down payment or equity, required reserves and an eligible property.

Exact requirements are investor specific.

1. Bank Statement Requirements

Programs commonly request either:

12 months of consecutive statements

or

24 months of consecutive statements

Statements generally need to be complete and readable.

The lender reviews transaction activity to identify recurring eligible income.

2. Personal vs. Business Statements

Personal Statements

Certain programs permit personal accounts when self-employment income is deposited there.

Business Statements

Business accounts may be used when operating income primarily flows through the business.

Business deposits generally require an expense calculation.

3. Eligible Deposit Requirements

Not every deposit automatically becomes qualifying income.

The underwriter may distinguish between:

• Business revenue
• Client payments
• Transfers
• Loan proceeds
• Asset-sale proceeds
• Refunds
• Reimbursements
• Unusual deposits
• Duplicate transactions

The objective is to identify recurring, supportable income.

4. Business Expense Requirement

Gross revenue is not the same as personal income.

Investors therefore use approved methodologies to account for operating expenses.

A standard factor may apply under one program.

Another program may permit a different calculation when supported by qualifying documentation.

This is why comparing multiple investor methodologies can be important.

5. Self-Employment Requirement

Self-employment history varies by program.

Certain investors may consider approximately one year of self-employment under qualifying circumstances, while others may require a longer history.

The lender may review:

• Business history
• Previous occupation
• Industry experience
• Business ownership
• Continuity of income
• Supporting documentation

6. Credit Requirements

There is no universal bank statement mortgage credit score.

Credit standards can change based on:

• LTV
• Occupancy
• Loan amount
• Property
• Mortgage history
• Significant credit events
• Reserves
• Investor

Certain programs may provide higher-LTV financing for stronger credit profiles.

7. Down Payment Requirements

Required down payment corresponds to the maximum approved LTV.

Examples:

LTV	Approximate Equity/Down Payment
90%	10%
85%	15%
80%	20%
75%	25%

Availability of any LTV is subject to the selected program and complete borrower profile.

8. Reserve Requirements

Many bank statement programs require eligible assets remaining after closing.

Reserve requirements can vary according to:

• Loan amount
• Occupancy
• Number of financed properties
• Credit
• LTV
• Property type
• Investor

Jumbo transactions may carry additional liquidity requirements.

9. Asset Documentation

A borrower may need to document:

• Down payment
• Closing costs
• Required reserves
• Other eligible funds

Assets used for qualification must satisfy applicable sourcing and documentation requirements.

10. Property Requirements

The property must meet the investor's eligibility criteria.

The lender may review:

• Property type
• Appraised value
• Condition
• Marketability
• Occupancy
• Location
• Transaction structure

Specialized properties can carry additional restrictions.

11. Occupancy Requirements

Depending on the program, bank statement mortgages may be offered for:

Primary residences
Second homes
Investment properties

Each occupancy type can have different underwriting parameters.

12. Purchase vs. Refinance Requirements

Programs may permit:

• Purchases
• Rate-and-term refinances
• Cash-out refinances

Maximum LTV and documentation requirements can vary by transaction type.

Common Documents to Prepare

A borrower may be asked for:

• 12 or 24 months of bank statements
• Identification
• Asset statements
• Evidence of self-employment
• Business documentation
• Explanations for large deposits
• Transfer documentation
• Housing history
• Purchase agreement
• Property information
• Insurance information
• Additional underwriting documentation

What Can Cause Problems?

Common issues include:

Transfers Being Counted Incorrectly

Money moving between your accounts is generally not new income.

Unexplained Deposits

Large or unusual transactions may need documentation.

Inconsistent Revenue

Significant fluctuations may require additional analysis.

Insufficient Reserves

Income alone does not satisfy every underwriting requirement.

Ineligible Property

A strong borrower can still encounter problems if the property does not satisfy the investor's guidelines.

Requirements for Jumbo Bank Statement Loans

Higher-balance transactions can require additional attention to:

• Liquidity
• Reserves
• Credit
• Down payment
• Property valuation
• Loan size
• LTV
• Overall net financial position

See Jumbo Bank Statement Loans Utah.

How to Prepare Before Applying

Start by having the statements analyzed.

Do not assume your business's gross deposits equal mortgage qualifying income.

A preliminary review can identify:

• Eligible deposits
• Transfer issues
• Potential qualifying income
• Required documentation
• Likely program fit
• Potential LTV
• Reserve considerations

Bank Statement Loan Requirements FAQ

Do bank statement loans require tax returns?

Certain programs may calculate qualifying income without relying primarily on traditional tax-return income. Other documentation is still required.

Do I need 12 or 24 months?

Both structures exist depending on the investor.

Is there a universal minimum credit score?

No.

Are reserves required?

Many programs require them.

Can I qualify after one year self-employed?

Certain programs may consider approximately one year under qualifying circumstances.

Can business accounts be used?

Yes, under qualifying programs.

Have Your Scenario Reviewed

Daniel Paris
Utah Mortgage Broker
NMLS #243976
801-604-4949
UtahLowRate.com

Return to Bank Statement Mortgage Loans Utah.

Requirements vary by lender and investor and are subject to change.