A bank statement loan or mortgage is a type of home loan that does not require you to submit tax returns or W-2s as proof of income.

Sometimes known as self-employed mortgage or alternative documentation loan, it is a popular choice for people who are not traditionally employed to apply for a mortgage. This enables them to get a loan to purchase a house, even when they don’t have a W-2.

Our post today aims to dive into what a bank statement loan is and help you understand all about it.

Without further ado, let’s get started!

Bank Statement Loans

Bank statement mortgage loans refer to loans where you can use bank statements instead of W-2s or tax returns to prove your income. It’s particularly useful for individuals with inconsistent or fluctuating income, such as doctors, realtors, or even lawyers.

Because this type of loan is regarded riskier, a lot of banks and lenders do not offer them. They are also a non-qualified mortgage, which means they are not guaranteed by Freddie Mac or Fannie Mae. With that said, there are still plenty of mortgage companies who can provide a bank statement loan, especially for high-earning borrowers who own their own business and don’t have a conventional income verification document.

How do Bank Statement Home Loans Work?

Applying for a bank statement loan can be quite different from a conventional mortgage. This is because you have to provide between 12 to 24 months of bank statements to your lender, instead of just two or three months like most traditional home loans. You are also required to submit any additional information related to your business, including a profit and loss statement and expenses.

Things like the nature of your self-employment or business, number of employees you might have, and whether there is a physical location can also be crucial information to provide. All of these will help the lender decide your eligibility for the mortgage.

While there’s a lot of flexibility when it comes to bank statement loan programs, there are some things to consider too. For example, the interest rate tends to be higher compared to a conventional loan.

Meanwhile, the down payment amount depends on factors like your credit score. A 620 FICO credit score may qualify you for a bank statement loan. However, having at least 700 can put you in a better position to get a smaller down payment and monthly payments.


If you’re a self-employed individual, then a bank statement loan is probably right for you. It’s great if your tax returns do not reflect your real income and if you don’t have a W-2. However, there are also some traditional mortgages that may consider self-employed people too!

If you are employed and have a regular W-2, consider applying for a conventional mortgage as it might be easier to qualify and understand. At the end of the day, it’s important to consider all your options properly before choosing a type of mortgage to apply for.

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