How Self-Employed Borrowers Can Qualify for a Mortgage With Bank Statements

By Pete Moran, CEO and Founder of First Premier Mortgage Lending, LLC

If you own a business or work for yourself, a bank statement mortgage may let you document your income with bank statements in place of tax returns. The lender reviews your deposits over the required statement period to calculate an average monthly income for mortgage qualification.

Which deposits count?

Customer payments and other verifiable business revenue generally count. Underwriters typically exclude tax refunds, transfers between your own accounts, and proceeds from loans. A transfer can move money you’ve already earned, so the lender may trace it to its original source to avoid counting the same income twice. If a large or unusual deposit is business revenue, an invoice or payment record can help document it.

How the 50% expense factor works

Many business bank statement programs use a 50% default expense factor to estimate operating costs. If your eligible deposits average $12,000 per month, a 50% expense factor leaves $6,000 per month in qualifying income for a sole owner.

If your business operates with lower overhead, some lenders may accept a letter from your CPA documenting a lower expense ratio. In the same example, an approved 30% expense factor would leave $8,400 per month in qualifying income. The lender decides whether it can accept the CPA letter and what minimum expense factor applies.

I’ve spent 29 years working with self-employed borrowers. If you’re considering a bank statement mortgage, I can help you estimate which deposits may count and whether documenting your actual business expenses could help you qualify.