If you own a business, you know the drill. You write off what you can, the return shows a modest year, and then a lender treats that number as what you earn. You've been told to "show more income for two years" by people who don't understand that showing more income means paying more tax.
A bank statement loan skips the return. The lender adds up the deposits that hit your account over twelve or twenty-four months, backs out the ordinary cost of running the business, and that's your income. No returns, no transcripts. And here's the part nobody mentions: hand a lender your tax returns and you're back on the return. On this loan, the statements are the file.
What counts, plainly:
Business statements.
Deposits in, minus an expense factor for what it costs to run your kind of business, times your share of ownership. Transfers between your own accounts and refunds don't count as income.
Personal statements.
The average of what came in over the period. Business run through a personal account can still work.
Also counts.
A W-2 from a spouse or a second job, and rent from a property you own, as long as it lands in a separate account.
That's the whole application. Not a return, not a P&L you'd have to have built, not a transcript request. Twelve consecutive months from the business account, or twenty-four, and proof the business has been around for a couple of years, which your CPA or your license board already has on file.
And here's what makes this loan different from every other one on this site: the lender reviews the statements up front, every deposit, every withdrawal, every recurring payment, and hands back your actual qualifying income before you write a single offer. You shop knowing the number. Not a guess from a calculator. The number.
What the lender looks for is boring and fair: a real ownership stake, deposits that look like a business, a handful of months without bounced payments, and enough left in reserve after signing day to weather a slow quarter. What it doesn't look for is the number your accountant worked so hard to make small.
Before we run it, I'll ask:
Do the deposits run through a business account, or does the business live in your personal account?
Has the business been around two years, or is it newer with a licensed profession behind it?
After the down payment, how many months of payments would still be sitting in the bank?
Your accountant's job is to make the return small. My job is to make sure the return isn't the thing that decides whether you get the house.
— Bobby Friel · CO Home Equity
If the lender qualified you on the deposits instead of the return, what would your offer look like?
| Conventional | Bank statement | DSCR (rentals only) | |
|---|---|---|---|
| Qualifies on | Tax return | Twelve or twenty-four months of deposits | The property's rent |
| Tax returns | Required | Not required | Not required |
| Property | Any | Primary, second home, rental | Rental only |
| First-time buyer | Yes | Yes, primary home | No |
| Rate | Lowest | Higher | Higher |
| Prepayment penalty | No | Only on a rental | Usually |
| Reserves after signing | Some | Scaled to the loan size | Several months |
| Fits | Return shows the income | Business owner, contractor, 1099, licensed professional | Investor with rentals already |
If your return shows what you make, conventional wins on cost. If it doesn't, the bank statement loan is the door, and it's the one I'd use for my own business.
Total up the deposits on your business statements for the period. Not transfers, not refunds. Just what came in.
Statement type
Period
Qualifying monthly income
$17,500
Payment room
$7,850 / mo
That supports a payment of about $7,850 a month. Bring the statements and we'll turn it into a price.
This is an estimate on the deposits you entered. The lender decides what counts and which expense method applies. The real number comes from the statements, on the first call.
Want me to check the statements before you write?You own a real share of a business that's been around a couple of years.
The return shows less than the deposits do.
You can send twelve consecutive months of statements without hunting for them.
You'll still have months of payments in the bank after the down payment.
Your return already shows the income. Conventional is cheaper.
The business is brand new and you're not in a licensed profession.
The account bounces payments regularly. A few in a year is fine; a habit isn't.
You'd be draining reserves to make the down payment.
Illustrative, not specific clients
Fourteen years in business, three trucks, a return that showed a modest year after the write-offs. Two banks said no. Twelve months of business statements said something different. Bank statement loan, primary home in Gypsum, signing day five weeks after the offer. He never showed anyone a return.
Licensed, in private practice eighteen months, income deposited to one business account. Conventional wanted two years of returns she didn't have yet. The licensed-profession rule and twelve months of statements got her a primary-home loan as a first-time buyer. She brought the statements to the first call and we wrote the offer the next week.
One desk, both sides. Here's the order.
What the business is, how the money comes in, and what you're looking at. You leave with an action plan and a list of the statements to send.
Through my secure client portal, or by phone. Twelve months of statements, a letter from your CPA or license board on the age of the business, and no tax returns.
The lender reads every statement, deposits, withdrawals, recurring payments, and returns your actual qualifying monthly income. Before you shop.
That number, on paper. Conventional next to it if the return comes near. We pick together, and now you know what you can write.
If I'm your agent, I write it with the loan already picked and the income already reviewed. If you have an agent, I work with them.
Every one of these files is read by a person, not a machine. I've seen what they ask about, and we answer it before they ask.
Papers, keys, done. Our insurance partner has the policy bound before you sit down.
Most bank statement files reach signing day within about a month of an accepted offer. The statements do the work.
I run three businesses. I know exactly what a good accountant does to a tax return, and I know what a bank does with it afterward. Those two facts have kept more business owners out of houses than any rate ever did.
The bank statement loan is the fix, and most self-employed buyers in Colorado have never been offered one, because the person across the desk only sells what the bank sells. As a broker I place it through several outlets, and I'll put it next to conventional on paper so you see the cost of each.
Run your deposits above. If the number works, send me the statements and we'll write the offer. If it doesn't, send them anyway and we'll see what's really in there.
Bring them to the first call. The lender reviews them and hands back your real qualifying income before you shop, so the offer you write is one you can fund.
Bank statement loans are underwritten by a person, not a formula. Program terms, expense methods, and reserve requirements change. Every figure on this page is an estimate until your file is underwritten.
Bank statement and conventional home loans placed by Bobby Friel, licensed mortgage broker (NMLS# 332039, Friel-Good Mortgage, Inc. NMLS# 1901977) and licensed real estate broker, Colorado. Insurance through our insurance partner. (720) 799-2202 · info@cohomeequity.com.
Bobby Friel · NMLS# 332039 · Friel-Good Mortgage, Inc. · NMLS# 1901977 · Edwards, Colorado