Bank statement income estimator

What are bank statement loans?

A bank statement loan is a non-QM (non-qualified) mortgage that qualifies you on your actual cash deposits rather than on tax-return net income. They exist because many self-employed borrowers earn well but show low net income after legitimate write-offs — write-offs that make perfect sense for taxes but tank a conventional mortgage application.

Instead of Schedule C net income, the lender averages 12 or 24 months of your bank deposits and applies an expense factor to arrive at qualifying income. The result is often far higher than what a two-year tax-return average would show.

How the expense factor works

Not every dollar deposited is income — some deposits represent business expenses flowing through your account, transfers between accounts, or proceeds from asset sales. The expense factor is the percentage the lender deducts to approximate your net profit. A 50% factor on $15,000/month in deposits yields $7,500/month of qualifying income.

Factors vary by lender and account type. Business-account programs typically start at 50%. Personal-account programs — which exist but are less common — usually apply higher factors (60–70%) because the lender has less visibility into the income source.

Why a CPA letter matters

A letter from your CPA or tax preparer certifying your business expense percentage gives the lender documentation to support a lower expense factor. Without it, most lenders default to 50%. With one, some lenders will go to 40–45%, which can meaningfully raise your qualifying income and lower your debt-to-income ratio. If you’re near the edge of qualifying, a CPA letter is often the cheapest leverage available.

When bank-statement income beats tax-return income

If you write off a large portion of revenue — home office, vehicle, equipment, travel, retirement contributions — your tax-return net income may be a fraction of what you actually deposit. A bank-statement loan reads what actually hit your account. This matters most for:

• Freelancers, consultants, and gig workers with significant deductions.
• Seasonal businesses where one or two months drive most of the annual total.
• Business owners whose Schedule C shows a loss year in an otherwise good run.
• Borrowers who want to maximize purchasing power without restructuring their taxes.

Use this estimator alongside the affordability calculator to see how bank-statement qualifying income changes your maximum home price.