Bank statement loan vs. FHA loan
Self-employed buyers often weigh these two when savings are tight. FHA offers a 3.5% down payment and lenient credit, but it still qualifies you on tax-return net income — so heavy write-offs can sink the application. A bank statement loan ignores those write-offs by reading deposits, but asks for a bigger down payment.
It's a trade between a low down payment (FHA) and a forgiving income method (bank statement).
Side by side
| Factor | Bank statement loan | FHA loan |
|---|---|---|
| Qualifying income | Business deposits, after expense factor | Net income from 2 years of tax returns |
| Down payment | 10–20% | 3.5% |
| Minimum credit | 620–660+ | 580+ (3.5% down) |
| Effect of write-offs | Ignored — deposits drive qualifying | Lower your net income and qualifying figure |
| Mortgage insurance | None (priced into rate) | MIP (upfront + annual) |
| Rate | ~0.75–2% above conventional | Near conventional |
Figures are representative ranges, not quotes, and vary by lender. Read the full guides: Bank statement loan · FHA loan.
Who should pick bank statement loan
Self-employed borrowers whose write-offs leave too little net income for FHA, but who have a 10–20% down payment and strong deposits.
Who should pick fha loan
Self-employed borrowers with modest savings whose net income (after add-backs) still qualifies — FHA's 3.5% down is the cheaper entry if your returns support it.
Bottom line
Still deciding? Take the 5-question loan quiz, compare every option on the loan types page, or size a purchase with the affordability calculator.
FAQ
Only if your two-year net income (with add-backs) is enough to support the payment at FHA's DTI limits. If write-offs push it too low, FHA won't work — that's exactly when a bank statement loan, which reads deposits, becomes the path.
Usually yes — FHA rates sit near conventional, while bank statement loans carry a premium. The bank statement loan's advantage isn't the rate; it's qualifying you on income FHA can't see.
Educational information only — not financial advice, and not a quote, pre-approval, or offer of credit. Mortgage Merlin is a publisher, not a lender or broker.