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In today’s economy, it is important to know the most effective way to obtain the best loan for you in your current employment position and financial status. As a self-employed business owner, it may be difficult to apply for traditional loans as you might not have the required tax forms and documents. 

Consultants, freelancers, small business owners, doctors, lawyers, real estate investors and agents are all professions in which it is difficult or impossible to receive a normal loan because of the adjusted income for deductions and business write-offs on their tax returns. If this sounds like your predicament, a bank statement loan might be the best solution for you.

Bank statement loans offer a different route in providing proof of your income and cash flow: a bank statement. A bank statement is a summary of all financial transactions made with your account that month whether it be payments made to others or payments others made to you. This summary can help you make smart financial decisions in the future and can be beneficial in learning how to manage your money. With this financial summary, you can apply for a bank statement loan. 

In today’s economy, it is important to know the most effective way to obtain the best loan for you in your current employment position and financial status. As a self-employed business owner, it may be difficult to apply for traditional loans as you might not have the required tax forms and documents. 

Consultants, freelancers, small business owners, doctors, lawyers, real estate investors and agents are all professions in which it is difficult or impossible to receive a normal loan because of the adjusted income for deductions and business write-offs on their tax returns. If this sounds like your predicament, a bank statement loan might be the best solution for you.

Bank statement loans offer a different route in providing proof of your income and cash flow: a bank statement. A bank statement is a summary of all financial transactions made with your account that month whether it be payments made to others or payments others made to you. This summary can help you make smart financial decisions in the future and can be beneficial in learning how to manage your money. With this financial summary, you can apply for a bank statement loan. 

How do bank statement loans work?

How do bank statement loans work?

Bank statement loans work differently than traditional loans. A traditional loan requires tax returns, W-2s and paycheck stubs to verify your income. A bank statement loan is a loan that only requires the bank statement itself. This type of loan is most advantageous to those who are self-employed borrowers or do not have a steady income. 

You may be wondering why your lender may need your bank activity in order to lend. In addition to ensuring that you can pay off the loan and make a down payment, the lender also checks your bank activity to ensure that your assets are “seasoned” and “sourced.” 

Seasoned means that the money has been in the account for a substantial amount of time and was not recently placed there. 

Sourced means that the source of income is legitimate. Most banks require a 12 month minimum for bank statements while others may require less. Even if the bank does not require it, a 24 month bank statement is preferred if you want better interest rates and terms. 

What are the types of bank statement loans?

There are two types of bank statements that a bank statement loan may require : personal bank statements and business bank statements. It is important to know that some banks may require a business bank statement over a personal one. 

With a business bank statement, lenders can review your average daily, your P&L statement (profit and loss statement) or a summary of your company’s revenues and expenses during that specified period, cash flow, and income as a business owner and get some insight on whether or not you will be able to pay back the loan quickly. Be warned that a low balance and low/negative daily balances may label you as a risk and ward off potential lenders.

How are bank statement loans different from traditional loans?


Although bank statement loans are more convenient for those who cannot provide income confirmation in the traditional way, there are some drawbacks to this loan of which you as the borrower should be aware. 

Bank statement loans typically have higher interest rates and require higher down payments. This is in response to the risk the bank is taking on someone who cannot provide proof of income through taxes and paycheck stubs. The exact down payment you will pay depends on your credit score. 

According to Wells Fargo, “Your payment history accounts for 35% of your score, how much you owe on loans and credit cards makes up 30%, the length of your credit history accounts for 15%, the types of accounts you have make up 10%, and recent credit activity makes up the final 10%.” 

How easy is it to get a bank statement loan?

How do I find the best bank statement mortgage loan?Depending on your credit score, it may be easy or difficult to receive a bank statement loan. The good thing about talking to professionals like those at Internet Loans Direct is that they can guide you on what type of mortgage you qualify for with your current credit score. If your current credit score is low, they can also give you tips on how to repair your credit so you get the best mortgage available. 

You also need a decent debt-to-income ratio or DTI. Anything higher than 55% decreases your chances of being accepted for the loan significantly. Another thing lenders look for is how stable your income is. 

If you’ve had a sudden change in income in the last two months, you must be prepared to explain why. It is also a smart idea to look out for overdrafts. Overdrafts occur when someone withdraws or spends more money than they have in their account. This will be a big red flag to lenders and will most likely result in a rejection. 

Lastly, you will need enough cash or liquefiable assets to cover several months of payments. Make sure to do research on what certain banks require or expect before applying for a bank statement loan with them. 

What banks offer a bank statement loan?

Some banks that offer bank statement loans are Cross Country Mortgage and The First National Bank of America. Cross Country Mortgage requires 24 month personal bank statements only and are available in every state. They do not have a set minimum credit score, but require good or excellent credit and have a DTI requirement of at most 50%. 

The First National Bank of America offers both 12 month personal and business bank statements, have no minimum loan amount, and require a DTI of at most 55%. They are available to lend in most states. Researching banks that take bank statement loans is pivotal in finding the best loan option for you.

How do I access my bank statement?

To access your bank statement to apply for a loan, you must first sign in to your online bank account. Then, look for terms like “services,” “‘bank statement,” etc to find where the bank puts their electronic statements. Select the 12 month or 24 month bank statement period you want to view. Save the PDF statement in a secure location and print it when you’re ready to apply for the bank statement loan. 

Most banks have you sign a document stating that you agree to go paper-free and to receive all information online so if you have a preference for receiving paper documents, it may be difficult to access your bank statement that way.

How do I find the best bank statement mortgage loan?

How easy is it to get a bank statement loan?When you buy a home or any type of real estate, you may need a mortgage loan. Bank statement loans can also help with this. Many banks offer bank statement mortgage loan programs designed for home buyers who are self-employed borrowers and who typically have substantial tax write-offs that make it difficult to provide proof that allows the mortgage lender to verify their income. 

When looking for the right bank statement mortgage loan program for you, the research is very similar to regular bank statement loans with a few additions. In addition to 12 month vs 24 month bank statement requirements, DTI maximums and credit score minimums, you must also research how long the rates are fixed and how much of the company you must own for both business and personal bank statements before signing on with the home loan.

Bank statement loans may be the best option for you if you cannot provide the necessary proof to verify your income. Researching what certain programs require is the most effective way to find the loan that works best for your financial and professional situation.