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NMLS#: 2526130 (Company) · 513013 (Adam Styer)
A bank statement loan lets a self-employed borrower in Texas qualify for a mortgage using 12 or 24 months of bank deposits instead of tax returns. Adam Styer (NMLS #513013) closes bank statement loans across Texas with credit scores starting at 660, down payments as low as 10%, and access to 40+ wholesale Non-QM lenders for personal-account, business-account, and 1099-only programs.
Why Bank Statement Loans Exist
Conventional mortgage underwriting was built around W-2 employees. Two paystubs, a couple of W-2s, an employment verification call, and you're done. Self-employed borrowers don't fit that model — and the gap is wider than most realize.
The problem isn't that self-employed people don't make money. The problem is that the tax code rewards them for making their money look small. Section 179 deductions, vehicle write-offs, home office, business meals, depreciation, retirement contributions, health premiums — every legitimate deduction reduces taxable income. By the time the return is filed, a contractor pulling $250,000 in revenue might show $80,000 of net Schedule C income. Fannie Mae sees $80,000. The bank statement lender sees the actual $250,000.
Bank statement programs were built specifically to close that gap. They're a recognition that for millions of business owners, freelancers, gig workers, and 1099 contractors, tax returns are not a fair proxy for income. They're a tax-optimization tool. And using them to qualify a mortgage punishes people for being good at running their business.
For a more general overview of self-employment financing options, read the self-employed mortgage guide. This page goes deeper on the bank statement program specifically — how the math works, what lenders look for, and how to structure the loan to qualify for the most house.
How Underwriters Calculate Income on a Bank Statement Loan
This is the section most other lender websites skip. It's also the most important part of the loan, because the same borrower can qualify for wildly different loan amounts depending on which method is used and how the deposits look.
Method 1: Deposits Method (Most Common)
The underwriter pulls 12 or 24 months of statements, totals the eligible deposits, divides by the number of months, and applies an expense factor.
Worked Example — Business Bank Statements
Total business deposits over 12 months: $240,000
Average monthly deposits: $240,000 ÷ 12 = $20,000
Expense factor applied: 50% (typical default)
Qualifying income: $20,000 × 50% = $10,000/mo
Annualized: $120,000
The expense factor is where the program gets interesting. 50% is the industry default for business accounts, but it's not a hard rule. The factor varies by industry and by lender:
- Service businesses (consultants, attorneys, real estate agents, financial advisors, designers): often 25–35% expense factor — fewer materials and overhead means more of the deposit is actual income.
- Standard mixed businesses (most LLCs, S-Corps, online businesses): 50% is the default.
- Contractors, restaurateurs, retail, anything with significant cost of goods: 50–70% expense factor — more of the deposit is paying for materials, labor, and inventory before it becomes income.
- CPA-letter override: some lenders will accept a CPA letter stating actual expense ratio. If your CPA confirms expenses are 30%, the lender uses 30% — meaningful difference.
Ineligible deposits get stripped out before the math runs: transfers between accounts, loan proceeds, refunds, tax refunds, gifts, and one-time large deposits flagged as non-recurring.
Method 2: P&L Method
A CPA-prepared profit and loss statement is submitted alongside the statements. The lender uses the P&L net income figure and uses the bank statements only to validate that deposits roughly match revenue. This method works well for borrowers whose actual expenses are higher than the standard 50% factor — a CPA P&L showing 65% real expenses unlocks lower qualifying income but a more accurate underwriting picture, and some lenders pair this with a lower rate.
Method 3: Hybrid
The deposits and the P&L are both reviewed. The underwriter typically uses the lower of the two as qualifying income. Hybrid programs are most common at $1M+ loan amounts where lenders want extra confidence in the income number.
12-Month vs. 24-Month Bank Statement Programs
Most wholesale Non-QM lenders offer both lookbacks, and choosing correctly can change your qualifying income by tens of thousands of dollars.
| Factor | 12-Month Program | 24-Month Program |
|---|---|---|
| Income lookback | Most recent 12 months | Most recent 24 months |
| Rate premium | +0.125% to +0.375% over 24-mo | Baseline Non-QM rate |
| Down payment | Often 15% minimum | Often 10% minimum (strong credit) |
| Best for | Borrowers with sharply rising recent income | Borrowers with steady or seasonal income |
| Reserves | 3–6 months PITI typical | 6+ months PITI typical |
Quick rule of thumb: if last year's income is at least 25% higher than the year before, the 12-month program almost always qualifies you for more loan even after the rate bump. If your income is steady or you're a seasonal business (landscaping, restaurants, tax prep) the 24-month program smooths the curve and prices better.
Personal vs. Business Bank Statements
Whether the lender pulls personal or business statements changes the qualifying math significantly.
Business Bank Statements
Show gross business cash flow before owner draws. Underwriters apply an expense factor (default 50%) to estimate net income. This usually qualifies you for the most income because the lender sees the full revenue side of the business. Required documents: business license or DBA filing, business bank statements showing the business name, and entity documents if LLC/S-Corp.
Underwriters look for: consistent monthly deposit volume (consistency matters more than amount), no dramatic month-over-month swings without explanation, and deposit volume that roughly tracks the business size. A "consultant" depositing $80,000 in a single month and $200 in the others will get scrutinized.
Personal Bank Statements
Show income after the business has paid everything else — rent, payroll, materials, taxes. Personal-account programs apply a smaller expense factor (often 0–15%) since the money in the account already represents the owner's take-home. Best for sole proprietors and freelancers who run everything through one personal account.
Personal-statement programs are also the path for co-mingled accounts. Roughly half of self-employed Texans run business and personal money through the same account — the underwriter handles it, but expects clear notation on transfers and large non-business deposits (tax refunds, gifts, etc.).
1099-Only Programs
A separate sub-category. If 90%+ of your income is reported on 1099s (real estate agents, insurance agents, independent contractors), some lenders skip the bank statement review entirely and use gross 1099 income with a flat expense factor of 10–20%. Simpler, faster, and usually friendlier than a full bank statement file. Bring your two most recent years of 1099s and a current YTD earnings letter from the payer.
Who Bank Statement Loans Are Built For
1099 Contractors
If you receive 1099s from one or more payers, you're the prototypical bank statement borrower. Tax returns understate your income because you're writing off legitimate business expenses. Deposit-based qualifying captures what you actually earn.
Business Owners (LLC / S-Corp)
Owners taking modest W-2 salaries from their own S-Corp and pulling the rest as distributions get squeezed by conventional underwriting. Business statements show the full revenue picture and qualify you for the home your actual income supports.
Real Estate Agents
Variable commission income, heavy 1099 volume, and aggressive expense write-offs make agents a near-perfect fit. 1099-only programs are often the cleanest path. More for realtors →
Consultants & Service Professionals
Attorneys, financial advisors, designers, marketing consultants — service businesses with low overhead often qualify for the lowest expense factors (25–35%), which means more qualifying income from the same deposits.
Restaurateurs & Retail Owners
Higher expense factor (typically 60–70%) but bank statement loans still beat the alternative for owners whose tax returns are buried under depreciation and inventory write-downs.
Gig Workers & Freelancers
Multiple income sources, irregular deposit patterns, no traditional employer — bank statement loans work where conventional fails. 12-month programs handle ramping income best.
Bank Statement Loan Programs and Pricing
Every wholesale lender prices Non-QM differently. The numbers below are representative for Texas in 2026 — the actual quote depends on credit, loan amount, expense factor, and which investor we shop the deal to.
| Detail | Typical Range |
|---|---|
| Rate vs. conventional | +0.5% to +1.5% |
| Minimum credit score | 660–680 entry; 720+ for best pricing |
| Down payment | 10% (strong credit) to 20–25% standard |
| Maximum LTV | 85–90% on owner-occupied; 80% on second home; 75–80% on investment |
| Loan amounts | $150K up to $3M+ (jumbo bank statement) |
| Reserves | 3–12 months PITI (varies by LTV and loan amount) |
| Self-employment history | 2 years standard; some programs allow 1 year + same-industry W-2 history |
What We'll Need From You
Bank statement loans are documentation-light compared to conventional, but they're not no-doc. Plan on:
- 12 or 24 months of bank statements — personal, business, or both, depending on which program fits.
- Government-issued photo ID — driver's license or passport.
- Proof of self-employment for at least two years — business license, DBA filing, Secretary of State LLC filing, or a CPA letter on letterhead confirming dates.
- CPA letter (sometimes required) — confirming actual business expense ratio if you want a lower expense factor than the lender's default.
- Two years of 1099s — if going the 1099-only route.
- Proof of funds for down payment and reserves — recent statements from any account holding the funds.
- Entity documents — if you're closing through an LLC or your business is structured as an LLC/S-Corp.
What you won't need: tax returns, W-2s, paystubs, employment verifications, IRS transcripts, or a 4506-T.
Bank Statement Loan FAQ — Texas
A bank statement loan is a Non-QM mortgage that qualifies self-employed borrowers using 12 or 24 months of bank deposits instead of tax returns. Underwriters average eligible deposits, apply an expense factor (commonly 50% for business accounts), and use the result as monthly qualifying income. No W-2s, no paystubs, no IRS transcripts.
Yes. 1099 contractors are one of the most common bank statement loan profiles. Some lenders offer dedicated 1099-only programs that take your gross 1099 income and apply a flat expense factor (often 10–20%) — simpler and usually friendlier than a full bank statement review. If you also deposit cash from side work, a standard 12 or 24 month bank statement program may qualify you for more.
Co-mingled accounts are fine — most underwriters expect them for sole proprietors. Personal-account programs apply a smaller or zero expense factor since you've already paid yourself. Lenders will look hard for transfers between accounts to avoid double-counting the same dollar, so clean labeling helps. If your business and personal accounts are separate, business statement programs usually qualify you for more.
No. The whole point of a bank statement loan is to skip tax returns. Underwriters do not pull transcripts and your write-offs do not reduce qualifying income. You will need a business license or CPA letter confirming at least two years of self-employment, government ID, and the bank statements themselves.
Bank statement loans typically price 0.5%–1.5% above a comparable conventional loan, depending on credit score, down payment, and program. The premium covers the alternative documentation risk. For self-employed borrowers whose tax returns understate income, the math almost always favors bank statement financing — qualifying for the right house at a slightly higher rate beats not qualifying on a conventional loan at all.
24-month programs price slightly better and require more reserves but smooth out seasonal income — ideal for landscapers, restaurants, and tax preparers. 12-month programs cost 0.125–0.375% more in rate but qualify you for more income if last year was sharply better than the year before. We'll model both for your specific deposits before picking a lane.
Most bank statement programs start at a 660–680 minimum. 700+ unlocks better pricing and lower down payment options. The strongest programs (90% LTV, lowest expense factors) typically require 720+. Below 660 is possible with a few lenders but expect higher rates and 20–25% down.
10% down is achievable with strong credit (720+) and a clean two-year self-employment history. 15% down is the most common entry point. 20% down opens the widest lender pool and the best pricing. Loan amounts above $1 million typically require 20–25% down regardless of credit.
Yes, but for most investment-property buyers, a DSCR loan is a cleaner fit — DSCR qualifies on the rental income of the subject property and skips personal income entirely. Bank statement loans on investment properties cap LTV at 75–80% and price higher than DSCR for most scenarios. We'll compare both for your deal.
Typical close is 25–35 days. Bank statement loans involve more underwriting review than conventional (someone has to read the statements line by line) but less back-and-forth than a heavy tax-return file. Clean statements, prompt document responses, and no last-minute large deposits keep the timeline tight.
Other Programs to Consider
Bank statement is one of several ways to qualify outside the conventional box. Depending on your full picture, one of these may fit better:
- Self-Employed Mortgage Guide — broader overview of how self-employed borrowers get approved across all program types.
- Non-QM Loans — the full Non-QM landscape including bank statement, asset depletion, and ITIN.
- DSCR Loans — for investment properties, qualifying on the rental income of the subject property.
- DSCR Loans across Texas — statewide DSCR financing with no-state-income-tax math for out-of-state buyers.
- DSCR Loans in Fredericksburg, TX — wine-country short-term rental financing with AirDNA underwriting.
- DSCR Loans in Dripping Springs — wedding-venue and Hill Country STR financing.
- High-Net-Worth Mortgage — asset depletion and pledged-asset programs for borrowers with significant liquid wealth.
- Investor Loan Programs — full menu of options for real estate investors.
★★★★★
"My CPA had me writing off so much that my returns showed almost no income. Adam ran my deposits, found a 12-month program, and closed us in 28 days on a house we couldn't have touched conventionally."
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