Business owners with substantial deductions
Customer receipts may support a different calculation after the lender accounts for expenses. Review permitted tax-return adjustments first so the comparison is fair.
Bank statement mortgages · Texas
Bank Statement Loans in Texas
A bank statement loan lets self-employed Texas borrowers qualify on 12 or 24 months of deposits instead of tax-return income. Minimum credit starts at 620 to 660, and the strongest files buy with 10% down.
Bank statement loans at a glance
- Qualifies on
- 12 or 24 months of deposits
- Minimum credit
- 620 to 660
- Max loan-to-value
- 90% purchase · 80% cash-out
- Loan size
- Up to $3M to $4M
- Expense factor
- 50% default · 10–15% with CPA letter
- Self-employment
- 2 years
Figures reflect programs Adam currently places. Your terms depend on the full file.
Who can a bank statement loan help?
A bank statement loan qualifies you on 12 or 24 months of deposits instead of the income on your tax returns. Business deposits are reduced for operating expenses before they count: the default expense factor is 50%, and a P&L or expense letter from an independent tax professional can lower it to a floor of 10% to 15% depending on the program. Several programs use a schedule instead of the flat 50%: 15%, 30% or 50% for a service business with zero, one-to-five, or more than five employees; 25%, 50% or 80% to 85% for a product business. Deposits into a personal account from a separately documented business account count at 100%; a commingled account is treated as a business account. Transfers between your own accounts, loan proceeds and refunds are excluded before any factor is applied. Primary-residence purchases go to 90% loan-to-value on the strongest files, 80% on cash-out, with loan amounts to $3 million to $4 million and minimum credit of 620 to 660 at reduced leverage.
What actually moves the file
The expense factor is the whole game, and it is negotiable with paper. A consultant with no employees and no office is a 15% expense business, not a 50% one; on $400,000 of deposits that is the difference between $28,000 and $17,000 of monthly qualifying income. The letter that proves it has to come from the preparer who filed the return, has to address every expense category, and cannot disclaim its own accuracy.
The second lever is the account. Business receipts landing in a personal account count in full only when two or three months of the business account prove the money originated there; if the accounts are mixed, the business factor applies to everything. I sort the accounts and the expense evidence before I pick the program, because the program with the best rate and the program with the best income calculation are rarely the same one.
The refinance in Which deposits count as income? shows the other side: the underwriter excluded a large payment described as a bonus even though it was reported on the borrower’s 1099, and the income dropped enough to move the debt ratio. The fix was documenting the payer and the compensation history, not arguing about the factor.
Contractors and commission earners
Statements can help explain how and when you get paid. A 1099-based approach may also fit, depending on the earnings and supporting records.
Businesses with seasonal or uneven receipts
A fuller deposit history can show the business cycle. Large payments and quieter months need context; the strongest month alone is not a sustainable income figure.
These are possible review paths, not approval categories. If you are still deciding which method fits, start with the self-employed income comparison.
How do eligible deposits become qualifying income?
First identify the deposits the program treats as income. Then apply the required expense treatment, ownership share and other adjustments. Transfers between accounts, loan proceeds and other non-income deposits do not become earnings simply because they appear on a statement.
Illustration: $240,000 of eligible business deposits
Assume a lender accepts $240,000 of eligible receipts over 12 months, applies an assumed 50% expense factor, and the borrower owns 100% of the business.
- $240,000 ÷ 12 = $20,000 average monthly eligible deposits.
- $20,000 × (1 − 50% assumed expenses) = $10,000 after expenses.
- $10,000 × 100% assumed ownership = $10,000 monthly income in this illustration.
The $240,000 already excludes ineligible deposits. The expense factor and ownership calculation are assumptions, not universal program rules. Income trends and the complete file may change the result. This example does not establish a loan amount or approval.
Tax returns deserve the same careful review. A conventional calculation can include permitted add-backs, such as eligible depreciation, and other adjustments. Comparing unadjusted Schedule C profit with all bank deposits would misstate both methods. See Fannie Mae’s Schedule C guidance.
Start with your business type, approximate deposits, property goal and timing.
What affects the available loan terms?
The income the records support
Deposit sources, recurring business expenses, your ownership and earnings trends affect the calculation. An account’s gross inflow is only the starting point.
Credit, funds and the property
The loan amount, down payment or equity, credit, other debts, reserves and property use all affect which programs can be considered.
The actual offer
Compare rate, points, lender fees, payment, cash to close and cash left afterward. More calculated income does not automatically make a loan the better choice.
A bank-statement option may cost more than an available conventional loan. It is also worth comparing a smaller purchase, additional preparation time or another supported income method. A future refinance should be reassessed when the time comes, not assumed as the way the loan will become affordable.
Should we review 12 or 24 months?
The appropriate lookback depends on the program and what your business history shows. A 12-month period captures a more recent year; 24 months can show a longer pattern or a full comparison between seasons. Neither period automatically produces a better result.
| Pattern in the business | What needs to be understood |
|---|---|
| Recent growth | Whether the higher receipts are sustainable and supported by current business activity. |
| Seasonal receipts | How busy and quiet periods compare across a complete business cycle. |
| Declining deposits | The cause, current earnings level and whether the decline is continuing. An older high average does not resolve this. |
| A new entity or ownership change | Business continuity, the start date and which earnings belong to you. |
Statement period is not business age. A 12-month statement program does not automatically accept a business that is only 12 months old. The lender’s history requirement must be checked separately.
When might another mortgage fit better?
Tax returns already support the goal
Start with the adjusted calculation and compare conventional options. Strong deposits alone are not a reason to choose a more expensive path.
Your 1099s or P&L tell the story more clearly
Compare 1099 income documentation or an eligible P&L approach. Each has its own history, expense and verification requirements.
Investments are stronger than business receipts
Qualifying with eligible assets may address the actual obstacle. Funds for closing and reserves need to be considered separately.
Financing a rental? Compare DSCR financing based on the property’s rental income. That is a property-focused alternative, not a financing method for your primary home.
A real review: which deposits count?
A self-employed refinance review illustrates why a large business payment and documented expenses can change the income calculation. The useful question was what the records could support, not simply how much money entered the account.
Read the self-employed refinance deposit review.
This is a strategy review, not a claim of a funded loan. Identifying borrower details are omitted. Individual circumstances determine the outcome.
Bank statement loan questions
What is a bank statement loan?
A bank statement loan is a mortgage option that uses eligible personal or business deposits as the primary evidence for a self-employed income calculation. The lender reviews deposit sources, expenses, ownership and income trends alongside credit, debts, funds and the property.
Does every deposit count as income?
No. Transfers between your own accounts, borrowed funds, refunds and one-off deposits without a documented business source are removed first. Then the expense factor is applied to what remains: 50% by default on business deposits, lower with a qualified expense letter, or a 15% to 85% schedule based on business type and headcount. Deposits larger than a month’s qualifying income get a written explanation.
Will I still need tax returns or other records?
A selected bank-statement program may use eligible deposits as the primary income documentation. That does not guarantee a file will need no tax returns, transcripts or other records. Business verification, deposit explanations and additional documents can still be required for the specific file.
Can I use personal statements instead of business statements?
Yes, and deposits that came from a separately documented business account count at 100% with no expense reduction. The lender needs two or three months of the business account to prove the source. If business receipts and personal money share one account, the account is treated as a business account and the expense factor applies. Ownership requirements differ too: 25% for the personal-statement method, 50% for the business-statement method at several programs.
Does a 12-month program mean I only need one year in business?
No. The programs I place require two years of self-employment; the statement period is separate. One program will look at an additional 12 months of statements when the first 12 don’t establish stability.
Can a bank statement loan be used to buy or refinance?
Yes. Primary-residence purchases go to 90% loan-to-value on the strongest files, and cash-out refinances to 80%, with loan amounts to $3 million to $4 million. For a rental property, also compare DSCR financing based on the property’s rental income.
Will it cost more than a conventional mortgage?
Usually, yes. You pay for the documentation flexibility. It’s worth it when your tax returns understate what the business earns; if they already support the loan, a conventional mortgage is usually cheaper. I compare both on the same day with the same assumptions.
I'm a 1099 contractor. Can I qualify on my deposits?
Yes. You can use 12 or 24 months of deposits, or a 1099-only program that starts from your gross 1099 income with a flat 10% expense factor. The 1099 route is often simpler; deposits can qualify you for more if you have other income coming in.
What if I co-mingle business and personal accounts?
You can still qualify. A personal account that also receives business receipts is treated as a business account, so the expense factor (50% by default) applies to the eligible deposits. Separate accounts usually qualify you for more: business money moved into a documented personal account counts at 100%.
What's the difference between 12 and 24 month programs?
A 12-month review uses a more recent year; 24 months can show two business cycles and seasonal patterns. The lender evaluates trends and sustainability. Neither period is automatically better, and the statement period is separate from the required time in business.
What credit score do I need?
Minimum credit starts at 620 to 660, depending on the program, at reduced leverage. Stronger credit unlocks the highest loan-to-value and better pricing.
How much down payment?
As little as 10% down on a primary-residence purchase for the strongest files (90% loan-to-value). Lower credit, larger loans or cash-out refinances need more equity; cash-out tops out at 80% loan-to-value.
How long does closing take?
Pre-approval usually takes one business day once your file is complete. After that, the timeline is driven by the income review, appraisal and title. Clean statements and quick answers on large deposits keep it moving; I map the documents up front so nothing surprises you late.
More about the statement review
Personal accounts, business accounts and duplicate deposits
Identify which accounts receive customer payments and which receive transfers. If business receipts move to a personal account, the review must avoid counting the same income twice. The program determines how business expenses and ownership are documented for each account type.
When a P&L or expense statement is relevant
An expense statement from an independent CPA, enrolled agent or CTEC preparer replaces the default factor with your actual ratio, subject to a floor of 10% to 15%. It has to be prepared by the person who filed your returns, address all expenses, and carry no disclaimer. A letter that says “approximately” or “to the best of my knowledge” gets rejected.
Records that can help explain the file
After the initial conversation, the selected path may require complete statements for the review period, proof of business ownership and activity, explanations for unusual deposits, expense information and records for closing funds or reserves. Additional documents depend on the file. Share financial records through the secure process Adam provides.
For the wider decision, return to self-employed mortgage options. To understand the program category, read what Non-QM means.
See whether your deposits support another option
Share the short version: what your business does, how long it has operated, your approximate deposits and your financing goal. Include any unusual payment or change in income that needs explaining.
I’ll review whether your deposits support a bank-statement approach, compare other income-documentation options, and explain which records to provide next.
See My Options
No financial documents are needed for this initial inquiry. Estimates are fine. Leave unknown figures blank. Only fields marked * are required.
This short review is not a loan application, pre-approval, or commitment to lend. Privacy