Pick the account
Personal or business — whichever shows the income most cleanly. Business accounts need you to own a meaningful share of the company (often 25%+). Mixing accounts is possible on some programs, co-mingling is not.
DSCR subtopic · self-employed
Your tax returns are a strategy. Your deposits are the truth.
Self-employed investors write off everything they legally can — and then get told their income is “too low” for a mortgage. A bank statement loan skips the returns and qualifies you on 12 or 24 months of actual deposits. Here’s how the math works and when it beats DSCR.
my business does $400k a year but my 1040 shows like $38k after write-offs. am I just stuck?
Not even close. Send me 24 months of the business account statements. We’ll qualify on the deposits, not the Schedule C your CPA worked so hard on.
The one-sentence version
What a bank statement loan is
A bank statement loan is a Non-QM mortgage that uses 12 or 24 months of bank deposits — personal or business — as the income documentation instead of tax returns. The deposits are totaled, cleaned up, adjusted for business expenses, and divided by the months to produce a qualifying monthly income. From there, it underwrites like a normal loan.
Eligible deposits − expense factor12 or 24 months=Qualifying income
How the income gets built
Four steps from statements to a number
Total the deposits
Eligible deposits over 12 or 24 months are added up. Transfers between your own accounts, loan proceeds, refunds and one-off windfalls are backed out. Large unusual deposits get a question — have the answer ready.
Apply the expense factor (business accounts)
Businesses have costs, so lenders subtract an expense ratio from business deposits — often a default around 50%, or a lower documented ratio with a CPA letter or profit-and-loss statement. Personal accounts generally skip this step.
Divide by the months
Net eligible deposits ÷ 12 or 24 = qualifying monthly income. That number goes into the same debt-to-income math as a conventional loan — it just didn’t come from a tax return.
What it typically takes
Bank statement loan characteristics
Typical, not guaranteed. Tiaira confirms the current guidelines for your scenario.
- Statements: 12 or 24 months of statements
- Accounts: Personal or business accounts
- Self-employment: 2+ years self-employed typical
- Down payment: 10–20%+ typical
- Credit: 660+ typical
- Loan amounts: Up to $3M on many programs
- Occupancy: Primary, second home or investment
Bank statement vs. DSCR
| Bank statement | DSCR | |
|---|---|---|
| Qualifies | You (deposits) | The property (rent) |
| DTI used? | Yes | No |
| Primary home? | Yes | No — investment only |
| LLC vesting? | Usually no | Yes |
| Best when | Deposits strong, rent thin, or buying a primary | Rent covers payment, want LLC, many properties |
Before you send statements
Three things that make the file go smoother
- Keep business and personal separate. Co-mingled accounts are the number-one reason statement files stall.
- Explain the big deposits. Anything unusual — an equipment sale, an insurance payout — needs a one-line explanation and a document.
- Don’t move money around right before applying. Transfers aren’t income, and shuffling creates questions. Steady is better than impressive.
can I use the bank statement loan on the fourplex instead of DSCR? the rents are kinda low
That’s exactly when it makes sense. If your deposits carry the DTI, we don’t need the property to carry the ratio. I’ll price both and show you the difference.
Straight answers
Bank statement loan FAQ
What is a bank statement loan?
A Non-QM mortgage that documents income with 12 or 24 months of bank statements instead of tax returns, W-2s or pay stubs. It is built for self-employed borrowers, business owners, 1099 contractors and anyone whose tax returns — thanks to legitimate write-offs — understate what they actually earn.
How is income calculated from bank statements?
Eligible deposits over the statement period are totaled, non-income deposits (transfers, loan proceeds, refunds) are removed, an expense factor is applied to business-account deposits, and the result is divided by the number of months. That becomes qualifying monthly income for the debt-to-income calculation.
What is the expense factor?
A percentage subtracted from business deposits to account for the cost of running the business. Business statements: expense ratio applied (often ~50%, lower with a CPA letter). The lower the documented expense ratio, the more income counts.
Can I use a bank statement loan to buy a rental property?
Yes. Bank statement loans can finance primary residences, second homes and investment properties. For an investment property, Tiaira will price it against a DSCR loan — if the rent covers the payment, DSCR may be simpler; if the rent is thin but your deposits are strong, bank statements can carry the deal.
How long do I need to be self-employed?
2+ years self-employed typical. Some programs accept less with a longer history in the same field. Your CPA or a business license typically documents the start date.
What down payment does a bank statement loan require?
Typically 10–20%+ typical, depending on occupancy, credit and the loan amount. Investment properties sit at the higher end.
Will a bank statement loan hurt me on rate?
The rate is typically higher than a conventional full-doc loan because the loan is Non-QM. The trade-off is qualifying on income your tax returns can’t show. If your returns are strong enough for conventional, Tiaira will tell you — it’s often the cheaper loan.
Bank statement or DSCR — which one should I use?
DSCR qualifies the property (rent ÷ payment) and ignores your income entirely; bank statements qualify you (deposits ÷ months) and use a normal debt-to-income ratio. Strong rent → DSCR. Strong deposits with thin rent, or a primary home purchase → bank statements. Tiaira runs both for self-employed investors.
This is not an offer to enter into an agreement. Not all customers will qualify. Information, rates and programs are subject to change without notice. All products are subject to credit and property approval. Other restrictions and limitations may apply.
Self-employed? Send Tiaira the statements, not the returns.
Twelve or twenty-four months, personal or business. She’ll tell you what income they support — and whether DSCR or bank statements wins for your deal.