# Michigan Bank Statement Loans for Self Employed Buyers By Derek Brickley (@derekbrickley) ยท Published 2026-10-16 Canonical: https://voce.com/@derekbrickley/michigan-bank-statement-loans-self-employed-buyers-kbf075 --- For a self employed buyer in Michigan whose write offs shrink the income on your tax return, a bank statement loan is usually the path that gets you approved, because it qualifies you on 12 or 24 months of real deposits instead of that smaller taxable number. But it is not for everyone. If your tax returns already show enough income to support the loan you want, a conventional mortgage usually costs less and needs less down, so the first question is which story your numbers tell. This guide compares the two paths so you can see which one fits you. #### Key Takeaways - A bank statement loan qualifies you with 12 or 24 months of deposits instead of tax returns, which helps self employed buyers whose write offs shrink their taxable income. - Lenders average your eligible deposits and apply an expense factor for business accounts, then use that monthly figure in the standard ability to repay check. - It differs from a conventional mortgage, which under Fannie Mae rules usually asks for two years of tax returns for anyone who owns 25 percent or more of a business. - The tradeoffs are real: expect a larger down payment, higher costs, and more reserves than a standard loan, and every lender sets its own program rules. - Programs and requirements vary by lender and borrower, so never assume one rate, approval, or qualifying number applies to you. ## What is a bank statement loan? A bank statement loan is a mortgage that uses eligible deposits in your personal or business bank statements to estimate your qualifying income, instead of relying on the taxable income from your tax returns. It sits in the Non Qualified Mortgage, or Non QM, category, which means it falls outside the standard Qualified Mortgage definition but still goes through full underwriting. The whole point is simple. When you run your own business and take write offs, your tax return shows less income than the money actually coming in. A conventional lender uses that smaller taxable figure. A bank statement loan looks at your real cash flow, so your true earning power can count. Every lender applies its own program rules, so no two files look exactly alike. The income method, the expense factor, the down payment, and the pricing all come from the specific lender you work with, not from one universal standard. ## How do lenders average your deposits to figure income? The lender reviews a full set of statements for the period the program requires, usually 12 or 24 months, then follows a clear process to turn deposits into income. It confirms you or your business own the account, checks the statements cover the whole period without gaps, lists the deposits and their sources, and removes any that fail the program rules. Deposits that do not count as income get pulled out. That means transfers between your own accounts, loan proceeds, tax refunds, gifts, and asset sale proceeds are typically excluded, because they are not money you earned from working. The lender wants recurring deposits tied to your actual business activity. Once the eligible deposits are set, the lender averages them across the review period to get a monthly figure. For a business account, it then applies an expense factor to account for operating costs, since gross business inflows are not all yours to keep. The resulting number is your qualifying income, used the same way any income is used in the ability to repay check. ## Personal or business statements, which one? You can qualify using personal statements, business statements, or a mix of both, and the choice changes how the math works. If business income flows straight into a personal account and you run a sole proprietorship, the personal statement path can be simpler, because the lender treats the eligible deposits as income directl A business statement shows gross inflows before most operating expenses, so the lender has to estimate how much of that is really your income. That usually means applying a set expense factor, or using a CPA backed letter when your actual expenses run lower than the standard factor. The cleaner the separation between your personal and business accounts, the smoother the review, because commingled money makes the income harder to pin down. Ownership matters too. If you share the company with partners, the lender may only count the income tied to your ownership share. Expect to document that you own and control the account, often with a business license, articles of incorporation, or a partnership agreement. ## Who does a bank statement loan fit? Bank statement loans are built for self employed people whose deposits tell a stronger story than their tax returns. That includes business owners, 1099 contractors, gig workers, consultants, commission based professionals, and real estate investors who route income through their own business. The common thread is write offs. A plumber in Lansing who deducts a truck, tools, and insurance on Schedule C may show a modest net number on paper while depositing far more every month. The same goes for a home stager in Ann Arbor or a contractor in Grand Rapids whose business runs through an LLC. A bank statement loan lets the real cash flow count. ## What documents do you need to gather? Start with the basics: 12 or 24 months of complete bank statements for the account you plan to qualify with, personal or business, and make sure they cover the full period with no gaps. Pull the statements from every account that feeds your income, and be ready to explain any transfer between your own accounts so it is not counted twice. Beyond the statements, a lender typically asks for your business ownership proof, such as a license, articles of incorporation, or a partnership agreement. A profit and loss statement and a few client contracts or invoices can help the underwriter connect your deposits to real work. If your actual expenses run low, a letter from a licensed CPA can sometimes lower the expense factor and raise your qualifying income. ## How is a bank statement loan different from a conventional mortgage? The biggest difference is what proves your income. A conventional mortgage for a self employed borrower typically asks for two years of signed federal tax returns, because the [Fannie Mae selling guide](https://selling-guide.fanniemae.com/sel/b3-3.5-01/underwriting-factors-and-documentation-self-employed-borrower) treats anyone with a 25 percent or greater ownership stake as self employed and generally requires that two year history. A bank statement loan replaces that return review with your deposit history. That matters because a conventional lender averages your net taxable income, which shrinks after write offs. A bank statement loan looks at the money that actually moves through your accounts. The same business owner can qualify for a much larger mortgage on the deposit based path. ## What are the tradeoffs of a bank statement loan? The honest answer is that a bank statement loan usually costs more and asks for more than a conventional mortgage. Because it sits outside the Qualified Mortgage box and carries more risk for the lender, you should expect a larger down payment, a higher rate, and steeper reserve requirements than a standard loan. Plan on a bigger down payment than the 3 to 5 percent you might put down on a conventional or FHA loan. Many bank statement programs want 10 percent or more depending on your credit and the property, and investment properties generally demand more still. That is not a promise of any specific number, it is the shape of the trade. Pricing is risk based. A stronger file, meaning higher credit, lower debt to income, and more money set aside, tends to bring better pricing. A weaker file gets worse terms. The same goes for reserves, lenders typically want several months of payments in the bank after closing. The payoff is access. For a self employed buyer whose write offs crush the taxable number, a bank statement loan may be the only realistic path to a mortgage at all. The trade is that you pay for that access, and you should go in knowing the true cost before you commit. ## What to know in Ann Arbor, Lansing and Grand Rapids Where you buy in Michigan shapes how a bank statement loan plays out, because the same income goes further in some markets than others. A deposit based loan lets your cash flow set the ceiling, but the price of the home you want sets the floor. In Ann Arbor, the market runs hot, with the university and a steady stream of buyers keeping values firm, so a self employed buyer often needs a higher qualifying number to compete. A 24 month statement history can help here, because it shows a fuller, steadier income picture than a single strong year. Lansing tends to offer more affordable entry points, which means your bank statement income can reach further and a smaller down payment may still get you into a solid home. Grand Rapids sits between the two, with a growing job base and a mix of price points, and it is a common landing spot for trade business owners whose deposit history is strong but whose tax returns run light on write offs. None of this is a promise about what you can qualify for. It is simply the local shape of the trade, and the right answer depends on your numbers and the specific program. ?Frequently Asked Questions4 questions 1Do I need tax returns for a bank statement loan? Usually not to prove your income, since the lender uses your deposits instead. They will still look at your credit, your cash reserves and the property. 2How many months of bank statements do I need? Most programs ask for 12 or 24 months. Which one fits depends on the lender and which period shows your income best. 3Can I use personal or business statements? Either can work, and some lenders allow a mix. Business statements usually get an expense factor applied, so the right path depends on how your income flows. 4Will a bank statement loan cost more than a conventional mortgage? Often yes. Expect a larger down payment and higher costs than a standard loan, since the lender takes on more risk. Programs vary by lender and by borrower, so ask for your own numbers. ## How do you get started? A bank statement loan starts with a conversation about your income structure, your documentation, and the property you want, because the right program depends entirely on your numbers. Bring your statements and your ownership paperwork, and a good loan officer will map out whether the deposit based path fits you or whether a conventional route still works better. Gold Star Mortgage Financial Group offers bank statement loan options for self employed buyers across Michigan, and you can talk with Derek Brickley to see if one fits your situation. No terms are promised here, no rates, no approvals, because programs and requirements vary by lender and by borrower. The clearest next step is to pull your last 12 or 24 months of statements and start the conversation. Are your deposits telling the story your tax return is not?