Bank statement loans California
Your business makes $150k yearly. Cash flow’s strong. Clients pay on time. You live well. Drive a nice car. Take vacations. Kids in good schools.
Then you apply for a mortgage. Denied. Why? Tax returns show $35k after write-offs.
Welcome to the self-employed mortgage nightmare. Been seeing this for forty years. Never gets old. Well, it does get old. Frustrating as hell actually.
Your CPA did their job – minimized your taxes legally. Home office deduction. Vehicle expenses. Business meals. Depreciation. Write-offs everywhere. Smart tax strategy. Terrible mortgage strategy.
Traditional lenders? Only see tax return income. Doesn’t matter that $8k to $12k hits your account monthly like clockwork. Doesn’t matter you’ve been in business ten years. Doesn’t matter you have $200k in the bank. Tax return says $35k. Computer says no.
Had a contractor client last year. $18k monthly deposits. Every month. Two years straight. That’s $216k annually. His tax returns after legitimate write-offs? $47k. Traditional lenders wouldn’t touch him. Bank statement loan? Approved at $130k annual income using 60% expense ratio. Got him the $650k home he wanted.
Bank statement loans fix this. They look at actual cash flow. Not tax returns. Finally someone gets it.
How Bank Statement Loans Work
Lenders analyze 12 to 24 months of bank statements. They look at deposits. Calculate average monthly income. Use 50% to 75% of that to qualify you depending on business type and expense assumptions.
No tax returns needed. No P&L statements. No complicated business financials. Just bank statements showing deposits.
Been helping self-employed borrowers since the ’90s. Contractors, consultants, freelancers, small business owners, realtors, commissioned sales, 1099 workers. All face the same problem – tax returns don’t show real income. But bank statements tell the truth.
Had a marketing consultant client last year. Tax returns: $42k. Bank statements: $11k monthly deposits for 24 months straight. Every single month. Consistent. Reliable. We used 60% expense ratio (conservative for service business). Qualified her at $132k annual income ($11k × 60% = $6,600 monthly qualifying income × 12 = $79,200 annually). Got approved for $650k home. 10% down. 680 credit. Rate was 7.25% (higher than conventional but who cares when conventional wouldn’t approve her at all).
Real estate agent client last month. Great year in 2023. $240k in commissions. Tax returns? $53k after expenses. Traditional mortgage? Denied. Bank statements showed the $240k clear as day. Used 50% expense ratio (agents have high costs). Qualified him at $120k annually. Approved for $500k loan. Bought a nice house in Elk Grove. Happy client.
That’s what bank statement loans do. They see reality.
The Self-Employment Problem
California homes cost a fortune. Need serious income to qualify. When your tax returns show $40k but you actually make $120k, you’re screwed with traditional loans.
Bank statement loans finally get it. They look at cash flow reality.
Income Calculation
Here’s the math:
- Add up deposits – 12 to 24 months of bank statements
- Calculate monthly average – Total deposits ÷ number of months
- Apply expense ratio – Multiply by 50% to 75%
- That’s your qualifying income
Example: $10k average monthly deposits × 60% expense ratio = $6k monthly qualifying income = $72k annually
Which accounts work?
- Personal bank accounts
- Business bank accounts
- Both combined for maximum income
What deposits count?
- Client payments
- Contract income
- Business revenue
- Regular deposits
What doesn’t count?
- Transfers between your own accounts
- Loan proceeds
- One-time windfalls
- Gift deposits
Every lender’s different. Some use 50%, others 75%. We shop multiple to find best calculation for your situation. Call (510) 589-4096.
Documentation Needed
12-month programs – Faster qualification. Need stable income. Good for strong credit.
24-month programs – More income flexibility. Higher loan amounts. Shows sustained business.
Account management matters – Overdrafts hurt. Bounced checks hurt. Keep accounts clean.
Got multiple accounts? Good. Lenders combine them for maximum qualifying income. Just need to explain what each account’s for.
Requirements
Credit: 620 minimum. 680+ gets better rates. Every 20 points matters. 640 versus 660? Different pricing tier. 680 versus 700? Better tier. 720+? Best available.
Down payment: 10% to 20%. Higher than conventional but that’s non-QM life. More down gets better rates. 10% might be 7.5%. 15% might be 7.25%. 20% might be 7%. 25% might be 6.75%. Every 5% down improves pricing.
Reserves: 2 to 6 months payments after closing. Cash cushion matters. Lenders want to see you can handle payments if business slows down. Self-employed income can be variable. Reserves show stability.
Self-employment history: Usually want 2 years in same business. Shows consistency. Not a hobby. Real income stream.
Compensating factors help:
- Bigger down payment (25% versus 10% changes everything)
- Higher credit score (720 versus 640 is night and day)
- More reserves (12 months versus 2 months shows strength)
- Lower debt ratios (35% versus 45% DTI helps)
- Long business history (10 years versus 2 years matters)
- Professional licenses (contractor license, real estate license, etc)
- Industry stability (healthcare versus crypto trading)
Had a contractor with 640 credit but 25% down and 8 months reserves. Ten years in business. Solid payment history. Approved at 7.125%. Not bad for 640 credit on a non-QM loan. Compensating factors absolutely work.
Another client. 720 credit but only 10% down and 2 months reserves. New business (3 years). Approved but rate was 7.75%. Credit helps but down payment and reserves matter more on bank statement loans.
Business Types
Service businesses – Clean cash flow. Lower expenses. Higher income calculation percentage (often 75%).
Product businesses – More variable. Need longer analysis. Still works.
Seasonal businesses – Use 24-month statements. Captures full cycles.
Easy approvals: Healthcare, consultants, licensed contractors Need more docs: Real estate agents, commissioned sales, project-based work
Rates and Costs
Rates: 0.5% to 2% higher than conventional. Non-QM premium. Manual underwriting costs money.
Worth it? Depends. If bank statements qualify you for $200k more house than tax returns would, absolutely.
Closing costs: Slightly higher. Additional underwriting fees. Extended doc review.
Many borrowers refinance to conventional later when tax returns show better income. Bank statement loan gets you in the house now.
Documentation Tips
Organize statements – Chronological order. No missing pages. Highlight regular deposits.
Explain weird stuff – Large one-time deposit? Explain it upfront. Don’t let underwriters guess.
Support docs help – Business license, contracts, client agreements. Shows stability.
Avoid pitfalls:
- Don’t mix excessive personal expenses with business income
- No missing pages or incomplete periods
- Clean accounts look better
Other Options
CPA P&L loans – CPA writes favorable P&L. Better rates than bank statements. Need accountant willing to sign off.
Asset depletion – Qualify on assets, not income. For high net worth borrowers.
Traditional loans – Still best if your tax returns show enough income. Lowest rates.
Which program? Depends on your docs, business structure, and situation. We help figure out best fit.
Timeline
Pre-approval: Quick once we analyze statements. Calculate income. Usually 2 to 3 days.
Full underwriting: Longer than conventional. Manual review. Expect 30 to 45 days total.
Communication matters – Underwriters ask questions. Respond fast. Keeps process moving.
Long-Term Strategy
Bank statement loans get you in now. Build equity. Later refinance to conventional when:
- Tax returns show better income
- Business matures
- Change tax strategy
- Property appreciates and LTV improves
Think of bank statements as a bridge. Gets you homeownership access today.
Bottom Line
Self-employed? Tax returns don’t show real income? Bank statement loans solve the problem.
We work with multiple non-QM lenders. Different programs. Different percentage calculations. We find the best fit for your situation.
California’s full of entrepreneurs. Small business owners. Consultants. Contractors. Freelancers. All making good money. All getting denied by traditional lenders.
Bank statement loans finally recognize business reality. Cash flow matters. Not tax strategy.
Call (510) 589-4096. Let’s review your bank statements and see what you qualify for. Check our FAQ for more questions.
Your business makes $150k yearly. Cash flow’s strong. Clients pay on time. You live well. Drive a nice car. Take vacations. Kids in good schools.
Then you apply for a mortgage. Denied. Why? Tax returns show $35k after write-offs.
Welcome to the self-employed mortgage nightmare. Been seeing this for forty years. Never gets old. Well, it does get old. Frustrating as hell actually.
Your CPA did their job – minimized your taxes legally. Home office deduction. Vehicle expenses. Business meals. Depreciation. Write-offs everywhere. Smart tax strategy. Terrible mortgage strategy.
Traditional lenders? Only see tax return income. Doesn’t matter that $8k to $12k hits your account monthly like clockwork. Doesn’t matter you’ve been in business ten years. Doesn’t matter you have $200k in the bank. Tax return says $35k. Computer says no.
Had a contractor client last year. $18k monthly deposits. Every month. Two years straight. That’s $216k annually. His tax returns after legitimate write-offs? $47k. Traditional lenders wouldn’t touch him. Bank statement loan? Approved at $130k annual income using 60% expense ratio. Got him the $650k home he wanted.
Bank statement loans fix this. They look at actual cash flow. Not tax returns. Finally someone gets it.
How Bank Statement Loans Work
Lenders analyze 12 to 24 months of bank statements. They look at deposits. Calculate average monthly income. Use 50% to 75% of that to qualify you depending on business type and expense assumptions.
No tax returns needed. No P&L statements. No complicated business financials. Just bank statements showing deposits.
Been helping self-employed borrowers since the ’90s. Contractors, consultants, freelancers, small business owners, realtors, commissioned sales, 1099 workers. All face the same problem – tax returns don’t show real income. But bank statements tell the truth.
Had a marketing consultant client last year. Tax returns: $42k. Bank statements: $11k monthly deposits for 24 months straight. Every single month. Consistent. Reliable. We used 60% expense ratio (conservative for service business). Qualified her at $132k annual income ($11k × 60% = $6,600 monthly qualifying income × 12 = $79,200 annually). Got approved for $650k home. 10% down. 680 credit. Rate was 7.25% (higher than conventional but who cares when conventional wouldn’t approve her at all).
Real estate agent client last month. Great year in 2023. $240k in commissions. Tax returns? $53k after expenses. Traditional mortgage? Denied. Bank statements showed the $240k clear as day. Used 50% expense ratio (agents have high costs). Qualified him at $120k annually. Approved for $500k loan. Bought a nice house in Elk Grove. Happy client.
That’s what bank statement loans do. They see reality.
The Self-Employment Problem
California homes cost a fortune. Need serious income to qualify. When your tax returns show $40k but you actually make $120k, you’re screwed with traditional loans.
Bank statement loans finally get it. They look at cash flow reality.
Income Calculation
Here’s the math:
- Add up deposits – 12 to 24 months of bank statements
- Calculate monthly average – Total deposits ÷ number of months
- Apply expense ratio – Multiply by 50% to 75%
- That’s your qualifying income
Example: $10k average monthly deposits × 60% expense ratio = $6k monthly qualifying income = $72k annually
Which accounts work?
- Personal bank accounts
- Business bank accounts
- Both combined for maximum income
What deposits count?
- Client payments
- Contract income
- Business revenue
- Regular deposits
What doesn’t count?
- Transfers between your own accounts
- Loan proceeds
- One-time windfalls
- Gift deposits
Every lender’s different. Some use 50%, others 75%. We shop multiple to find best calculation for your situation. Call (510) 589-4096.
Documentation Needed
12-month programs – Faster qualification. Need stable income. Good for strong credit.
24-month programs – More income flexibility. Higher loan amounts. Shows sustained business.
Account management matters – Overdrafts hurt. Bounced checks hurt. Keep accounts clean.
Got multiple accounts? Good. Lenders combine them for maximum qualifying income. Just need to explain what each account’s for.
Requirements
Credit: 620 minimum. 680+ gets better rates. Every 20 points matters. 640 versus 660? Different pricing tier. 680 versus 700? Better tier. 720+? Best available.
Down payment: 10% to 20%. Higher than conventional but that’s non-QM life. More down gets better rates. 10% might be 7.5%. 15% might be 7.25%. 20% might be 7%. 25% might be 6.75%. Every 5% down improves pricing.
Reserves: 2 to 6 months payments after closing. Cash cushion matters. Lenders want to see you can handle payments if business slows down. Self-employed income can be variable. Reserves show stability.
Self-employment history: Usually want 2 years in same business. Shows consistency. Not a hobby. Real income stream.
Compensating factors help:
- Bigger down payment (25% versus 10% changes everything)
- Higher credit score (720 versus 640 is night and day)
- More reserves (12 months versus 2 months shows strength)
- Lower debt ratios (35% versus 45% DTI helps)
- Long business history (10 years versus 2 years matters)
- Professional licenses (contractor license, real estate license, etc)
- Industry stability (healthcare versus crypto trading)
Had a contractor with 640 credit but 25% down and 8 months reserves. Ten years in business. Solid payment history. Approved at 7.125%. Not bad for 640 credit on a non-QM loan. Compensating factors absolutely work.
Another client. 720 credit but only 10% down and 2 months reserves. New business (3 years). Approved but rate was 7.75%. Credit helps but down payment and reserves matter more on bank statement loans.
Business Types
Service businesses – Clean cash flow. Lower expenses. Higher income calculation percentage (often 75%).
Product businesses – More variable. Need longer analysis. Still works.
Seasonal businesses – Use 24-month statements. Captures full cycles.
Easy approvals: Healthcare, consultants, licensed contractors Need more docs: Real estate agents, commissioned sales, project-based work
Rates and Costs
Rates: 0.5% to 2% higher than conventional. Non-QM premium. Manual underwriting costs money.
Worth it? Depends. If bank statements qualify you for $200k more house than tax returns would, absolutely.
Closing costs: Slightly higher. Additional underwriting fees. Extended doc review.
Many borrowers refinance to conventional later when tax returns show better income. Bank statement loan gets you in the house now.
Documentation Tips
Organize statements – Chronological order. No missing pages. Highlight regular deposits.
Explain weird stuff – Large one-time deposit? Explain it upfront. Don’t let underwriters guess.
Support docs help – Business license, contracts, client agreements. Shows stability.
Avoid pitfalls:
- Don’t mix excessive personal expenses with business income
- No missing pages or incomplete periods
- Clean accounts look better
Other Options
CPA P&L loans – CPA writes favorable P&L. Better rates than bank statements. Need accountant willing to sign off.
Asset depletion – Qualify on assets, not income. For high net worth borrowers.
Traditional loans – Still best if your tax returns show enough income. Lowest rates.
Which program? Depends on your docs, business structure, and situation. We help figure out best fit.
Timeline
Pre-approval: Quick once we analyze statements. Calculate income. Usually 2 to 3 days.
Full underwriting: Longer than conventional. Manual review. Expect 30 to 45 days total.
Communication matters – Underwriters ask questions. Respond fast. Keeps process moving.
Long-Term Strategy
Bank statement loans get you in now. Build equity. Later refinance to conventional when:
- Tax returns show better income
- Business matures
- Change tax strategy
- Property appreciates and LTV improves
Think of bank statements as a bridge. Gets you homeownership access today.
Bottom Line
Self-employed? Tax returns don’t show real income? Bank statement loans solve the problem.
We work with multiple non-QM lenders. Different programs. Different percentage calculations. We find the best fit for your situation.
California’s full of entrepreneurs. Small business owners. Consultants. Contractors. Freelancers. All making good money. All getting denied by traditional lenders.
Bank statement loans finally recognize business reality. Cash flow matters. Not tax strategy.
Call (510) 589-4096. Let’s review your bank statements and see what you qualify for. Check our FAQ for more questions.