12-Month Bank Statement Mortgage For Self-Employed Borrowers

This article covers a 12-month bank statement mortgage for self-employed borrowers. Until recently, most self-employed home buyers had difficulty qualifying for a mortgage. Many self-employed homebuyers often have the means to afford a higher-end home. Dale Elenteny, a senior mortgage loan originator at Gustan Cho Associates, says about 12-month bank statement mortgage loans for self-employed borrowers.

Discover how 12-month bank statement mortgages work for self-employed borrowers. Learn qualification requirements, benefits, and application tips for alternative income documentation loans.

Under the IRS Tax Code, self-employed wage-earners have the luxury of writing off many business expenses from their gross income. This allows them to pay less income taxes. Self-employed borrowers often face unique challenges when applying for traditional mortgages. Conventional loan programs typically require W-2 forms, pay stubs, and tax returns to verify income—documentation many independent contractors, freelancers, and business owners cannot easily provide. This is where 12-month bank statement mortgages become an invaluable solution.

What is a 12-Month Bank Statement Mortgage?

A 12-month bank statement mortgage uses statements from the past year instead of traditional income verification documents like tax returns or pay stubs. Self-employed individuals or those whose income sources must conform to the usual standards often prefer this option.

Lenders scrutinize bank statements to assess income stability and the borrower’s ability to repay the loan. Borrowers should expect to provide detailed bank statements and meet additional requirements, such as a strong credit score and a sufficient down payment.

It is important to thoroughly compare the terms and conditions of different mortgage options to determine which is best for one’s financial circumstances. A 12-month bank statement mortgage is a non-qualified mortgage (non-QM) loan that allows borrowers to use their personal or business bank statements as the primary form of income verification instead of traditional tax documents. This alternative documentation method recognizes that self-employed individuals may have fluctuating income that doesn’t always reflect their true earning potential on tax returns.

Mortgage Options With 12-Month Bank Statement Loans For Self-Employed Borrowers

Self-employed individuals, often assisted by adept accountants, frequently minimize their tax burdens by leveraging tax codes. Despite claiming numerous deductions resulting in negative income, many find it challenging to qualify for mortgages, particularly the 12-month bank statement mortgage. John Strange, a senior mortgage loan originator at Gustan Cho Associates, says the following about 12-month bank statement loans for self-employed borrowers:

Traditional lenders typically rely on adjusted gross income to calculate qualified income. However, there’s positive news for self-employed homebuyers seeking alternatives.

Gustan Cho Associates offers non-QM mortgages tailored for self-employed borrowers, bypassing the need for income tax returns. This article explores non-QM bank statement mortgages, including those designed specifically for self-employed individuals applying for the 12-month bank Statement Mortgage. 

How Does The 12-Month Bank Statement Mortgage For Self-Employed Borrowers Work?

Since lenders don’t need to wait for tax transcripts from the IRS or navigate complex business tax returns, the approval process can be significantly faster. Many bank statement mortgage applications can be processed within 30 to 45 days. The Bank Statement Mortgage For Self-Employed Borrowers offered at Gustan Cho Associates Mortgage Group works as follows:

• Must be self-employed.
• Qualified Income is derived by averaging the past 12 months of bank statement deposits.
• It can be either personal and/or business bank statements.
• Needs to be 12 months of bank statements from one bank.
• Only deposits count.
• Withdrawals do not matter.
• The borrower can deposit $10,000 per month and withdraw $9,999 the next day.
• Only the $10,000 deposit will be used for income.
• No bank overdrafts in the past 12 months.
• The average of the 12-month deposits is the monthly qualified income.

Income tax returns are not required. Income from bank statement mortgage loan programs will only be based on the past 12 months of bank statement deposits. Traditional mortgage applications can be frustrating for self-employed borrowers whose tax returns don’t accurately reflect their income due to legitimate business deductions. Bank statement loans recognize that actual cash flow often provides a clearer picture of repayment ability than adjusted gross income on tax returns.

What is a Bank Statement for a Loan?

A bank statement for a loan is a document provided by a bank that outlines the financial activity within a specific account over a set period. Lenders typically require borrowers to submit recent bank statements to assess income stability, spending habits, and overall financial health when applying for a loan.

Self-employed borrowers may qualify for larger loan amounts with bank statement mortgages compared to traditional loans, as the income calculation method often reveals higher qualifying income than what appears on tax returns.

Bank statements show deposits, withdrawals, balances, and transactions. Lenders use them to assess a borrower’s ability to repay a loan. Accurately submitting complete bank statements is crucial for a successful application. While bank statement mortgages typically carry slightly higher interest rates than conventional loans, the rates remain competitive within the non-QM lending space, especially for borrowers with strong credit profiles.

How Do I Get My Bank Statement for a Mortgage?

To obtain your bank statements for a mortgage application, you typically have a few options:

1. Online Banking: Customers can access their statements through the bank’s online banking portal. To do so, they should log in to their account and navigate to the statements or documents section. From there, they can select the necessary statements for the duration specified by their mortgage lender.
2. Mobile Banking App: If your financial institution provides a mobile banking application, you can easily retrieve and download your statements directly from the app. Search for the feature lets you view the application’s statements or documents.
3. Bank Branch: You can visit your bank’s branch and request physical copies of your bank statements. Remember that fees may be associated with this option, and the bank may take some time to provide the statements.
4. Customer Service: Contact your bank’s customer service via phone or email to request copies of your bank statements. They can send them electronically or provide guidance on accessing them online.

When you get your bank statements, please ensure they cover the period your mortgage lender’s listed and include all necessary information, such as your name, account number, and transaction history. Accurate and complete documentation is essential to supporting your mortgage application.

Other Lending Guidelines To Qualify For 12-Month Bank Statement Mortgage For Self-Employed Borrowers

To qualify for the Bank Statement Mortgage and/or Non-QM Loans, borrowers should have three established credit tradelines seasoned for the past 24 months. Verification of rent and/or past housing payment history is required.

Most lenders require a minimum credit score between 620 and 640 for bank statement mortgages, though some may accept scores as low as 600 with compensating factors. Higher credit scores generally result in better interest rates and loan terms.

Debt-to-income ratios (DTI) cannot exceed 50%. A 10% to 30% down payment is required, and the amount depends on the borrower’s credit scores, type of property, and credit history.

Non-QM Mortgage Loan Limits And Minimum Credit Score Requirements

The maximum loan limit is $3 million. Loans over $3 million are underwritten on a case-by-case basis and may require an additional down payment and reserves. No private mortgage insurance is required.

Minimum credit scores of 500 FICO are allowed. The lower the credit scores, the higher the down payment requirement. Late payments in the past 12 months, including mortgage late payments, are allowed.

No waiting period is required after bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale. Non-QM Loans and Bank Statement Mortgages on primary owner-occupant home loans have no pre-payment penalty. 

Benefits of Non-QM Bank Statement Mortgage

Non-QM and 12-Month Bank Statement Mortgage for Self-Employed Borrowers have many benefits. Non-QM Loans are not for borrowers with just bad credit. Many borrowers who qualify for government and conforming loans often benefit from Non-QM Mortgages. Here are the main benefits of using Non-QM and a 12-month bank statement mortgage for self-employed borrowers:

• Borrowers who exceed government and conforming limits
• Borrowers with late payments in the past 12 months, including mortgage late payments
• Borrowers who do not meet the mandatory waiting period after bankruptcy, foreclosure, deed instead of foreclosure, or short-sale
• Homebuyers needing a jumbo loan but have lower credit scores, down to 500 FICO
• Self-employed borrowers who have little to no income or negative income on their tax returns can qualify with our Non-QM 12-month bank statement mortgage

For more information about the contents of this article or other mortgage-related topics, please get in touch with us at Gustan Cho Associates at 800-900-8569, text us for a faster response, or email us at gcho@gustancho.com. The Team at Gustan Cho Associates is available seven days a week, evenings, weekends, and holidays. 

Mortgage Loan Requirements 12-Month Bank Statement Mortgage For Self-Employed Borrowers

The U.S. economy is booming. The Labor Department announced job growth numbers for November 2024. The numbers came in at 318,500, far exceeding economists’ expectations.

Lenders generally prefer debt-to-income (DTI) ratios below 50%, though some may accept ratios up to 50% with strong compensating factors such as significant cash reserves or excellent credit history.

This breaking news sent the Dow Jones Industrial Average skyrocketing. All other major stock market indexes set a historic record with the job growth numbers report. Unemployment at 3.5% set a record, hitting a 50-year low.

Mortgage Rates Lowest In Decades

Mortgage rates have been the lowest since the 2008 Great Recession. Many mortgage companies are launching creative mortgage loan programs such as the 12-month bank statement mortgage for self-employed borrowers.

12-month bank statement mortgages and subprime loans were non-existent after the 2008 Credit Market Collapse. This means the U.S. housing market is on fire, with no signs of market correction soon.

Many self-employed homebuyers were shunned from the housing market until the 12-Month Bank Statement Mortgage was launched a few years ago. In this article, we will cover and discuss the 12-Month Bank Statement Mortgage for Self-Employed Borrowers.

How Does The 12-Month Bank Statement Mortgage Program Work

Self-employed borrowers can deduct countless expenses associated with doing business. Until the introduction of our bank statement mortgage program, self-employed homebuyers had a rather difficult time qualifying for a home mortgage.

Many lenders require borrowers to maintain cash reserves equal to 2-6 months of mortgage payments after closing, depending on the loan amount and property type.

Unreimbursed expenses affect the gross income numbers when self-employed wage earners file income taxes. The gross income minus the expense deductions yields the adjusted gross income. Lenders will go off the adjusted gross income on tax returns when processing and underwriting qualified income.

How Self-Employed People Have A Hard Time Qualifying For A Mortgage

Due to the extensive deductions, self-employed borrowers often pay substantially less in taxes. However, self-employed wage earners with substantial unreimbursed business expenses had difficulty qualifying for a home mortgage.

With the 12-Month Bank Statement Mortgage loan program for self-employed borrowers, income tax returns are not required.

Borrowers need to provide bank statements for the past 12 months. The average monthly deposits are averaged for the past 12 months, and that figure is used as the borrower’s monthly income.  Withdrawals do not matter.

How Is Income Calculated on a 12-Month Bank Statement Mortgage For Self-Employed Borrowers?

Self-employed borrowers can now qualify for purchase mortgages and refinance transactions without income tax returns. Since lenders go off adjusted gross income after tax deductions, qualifying for a mortgage was difficult until now. Mortgage underwriters do not need income tax returns when calculating 12-month bank statement mortgage loans.

Qualified Income Are The Average of 12 Months of Deposits

Underwriters go off bank statement deposit averages over the past 12 months. Underwriters calculate qualified income by adding the total bank statement deposits for the past 12 months and dividing them by 12. The yielding figure is the monthly qualified income used for debt-to-income calculations. Withdrawals do not matter. Borrowers can make a $10,000 deposit every month and withdraw $9,999, and the income used is $10,000.

Calculating Eligible Deposits By Mortgage Underwriters

Underwriters will carefully analyze each month’s bank statements of the borrower for the past 12 months. They will take the end-of-month date of statements. During the month, they will calculate the total deposits, including irregular deposits. Deposits of non-business deposits, such as alimony and/or child support, will also be considered.

By averaging the deposits over the year, the lender can see your business’s liquidity and the total income without the deductions that often lower taxable income. The program simplifies the document checklist and speeds up the underwriting process, making it easier for business owners to get approved.

How Mortgage Underwriters Analyze Bank Statements To Determine Qualified Income

Mortgage underwriters will exclude credit returns, account transfers, and credit card advances. All the above factors will be considered when calculating qualified income and debt-to-income ratios.

12-month bank statement mortgage guidelines differ from lender to lender. Personal and/or bank statements can be used for bank statement mortgage loans.

It can only be 12-month bank statements from one banking institution, not multiple bank statements from different banks. Professionals who work on a contract basis, including consultants, graphic designers, writers, and IT specialists, often find bank statement mortgages ideal for their fluctuating income patterns.

Asset Depletion Mortgage Programs With No Income Required

Gustan Cho Associates offers asset depletion mortgage loan programs for borrowers with no income but substantial assets. A percentage of the assets is used as qualified income. The qualified income is derived by totaling all assets and taking a percentage of the assets through our income tool calculator.

The following are considered qualified assets:

• Stocks, bonds, and other securities
• Mutual funds.
• Vested amount of retirement account
• Bank accounts
• Other assets

Each of our various asset depletion investors calculates qualified assets differently. Please read our asset-depletion article on Gustan Cho Associates. Freddie Mac also has an asset-depletion mortgage program.

12-Month Bank Statement Mortgage Guidelines On Credit Scores

The minimum credit score required to qualify for Bank Statement Mortgage Programs is 500 FICO. However, the lower the borrowers’ credit scores, the higher the down payment requirements.

The minimum credit score required to qualify for a 12-month bank statement mortgage is 620 FICO, and the down payment is 10% or 20%.

For borrowers with credit scores below 500 FICO, lenders will require 24 months of bank statements with a 25% down payment. Borrowers with over 720 credit scores can qualify for a 10% down payment home purchase loan. There are no maximum loan limit caps on bank statement loan programs. 

How Long Does The Borrower Need To Have Been In Business

Self-employed borrowers need to have been in business for at least two years in the same business to qualify for bank statement loan programs. The business needs to have been verified to have been in business for 24 months. The lender can provide proof with a business license and/or other documents. Bank statement mortgage programs are available for owner-occupant homes, second/vacation homes, and investment properties.

What is an Interest-Only Bank Statement Mortgage?

A mortgage that is interest-only and based on bank statements is a loan where the borrower is required to pay only the interest for a set duration of time, which usually ranges from five to ten years. During this period, the borrower’s monthly payments consist solely of interest charges, without any reduction in the loan principal. This can result in lower monthly payments than traditional mortgages, where principal and interest are paid.

Once the interest-only term ends, the loan usually transitions into a fully amortized loan. This means that the borrower will be required to pay the principal and interest, increasing their monthly payments.

Interest-only bank statement mortgages are often sought after by individuals with fluctuating incomes or those who expect their financial situation to improve. Borrowers should thoroughly evaluate the potential risks associated with interest-only mortgages, which may include the likelihood of significantly increased payments once the interest-only period ends.

Key Features

• Relies on personal or business bank statements.
• Just 12 months of statements needed.
• Flexible debt-to-income (DTI) options.
• Bigger loan amounts than FHA or Conventional loans.
• Funds can be used for buying or refinancing.

Who Benefits From a Bank Statement Mortgage?

This loan makes sense for:

• Small business owners.
• Freelancers and gig workers.
• Independent contractors.
• Real estate investors.
• Self-employed pros with heavy write-offs.

Suppose low taxable income kept you from getting a mortgage. In that case, a 12-month bank statement mortgage for self-employed borrowers might be right for you.

Eligibility Requirements

Remember that lenders can vary, but here are the usual criteria.

Income Calculation

• Lenders take monthly deposits and average the 12 months.
• Business bank statements often subtract 50% for expenses unless a CPA verifies.
• Personal bank statements generally count 100% of deposits.

Credit Score

• You usually need a FICO score of 620–660.
• Better scores can get you lower rates and nicer terms.

Loan-To-Value (LTV) Ratio

• You can finance up to 90% for purchase loans, meaning you’ll need at least 10% down.
• Access up to 80% LTV for cash-out refinances on a 12-month bank-statement mortgage loan.

What Documents You’ll Need

No tax returns for this type of loan, but you’ll still send in:

• 12 months of personal or business bank statements showing monthly deposits.
• A clear copy of your driver’s license or a state-issued photo ID.
• Proof of self-employment, like a business license, CPA letter, or articles of incorporation.
• Provide a recent credit report plus any asset documentation your lender requests.

Benefits of a 12-Month Bank Statement Mortgage

• Skip the tax returns—quicker paperwork.
• Fast approval clock ticks.
• Go for a higher loan amount if your deposits allow.
• Accommodates various self-employed income types.
• Use the loan for your home, a vacation property, or an investment deal.

Possible Downsides

• A slightly higher interest rate than a traditional mortgage.
• Bigger down payment than you may see with FHA or VA loans.
• Not every lender has this loan in its product toolbox.

How Gustan Cho Associates Puts You First

At Gustan Cho Associates, self-employed applicants get a strong advantage. We work with no lender overlays, so we parse your deposits as you present them. Choose a 12-month or 24-month bank-statement mortgage in one of our partner states. Our team customizes the loan to the real income your business generates. Whether you’re a solo investor, a small business owner, or a busy professional, we deliver flexible finance solutions on your terms.

How to Get Your Loan Approved

1. Book a Chat – Talk with a mortgage pro who can guide you.
2. Grab Your Bank Docs – Pull together the last 12 months of personal and/or business statements.
3. Get Pre-Approved – See an early idea of the loan amount you’ll qualify for.
4. Fill out the Application – Send the required paperwork and nail down your loan amount.
5. Close the Loan – Move into your new property or refinance your current mortgage.

Questions People Always Ask

Can I Submit Personal and Business Statements?

• Sure!
• Some folks use personal accounts, while others go with business statements and adjust for expenses.

How Do You Figure Business Income?

• Lenders often use a blanket 50% expense figure, unless your CPA shows lower costs.

Must My Credit Be Perfect?

• Nope!
• Plenty of lenders let borrowers with scores of 620 or better qualify.

Is This Loan For Investment Properties Too?

• Absolutely.
• You can use it for a main home, vacation place, or investment property.

What if I’ve Had a Bankruptcy or Foreclosure?

• These loans usually have shorter waiting times than FHA or Conventional programs.
• The 12-month bank statement mortgage for self-employed borrowers can get you to your dream home faster, even if your tax returns don’t show your real earnings.
• This loan considers your actual cash flow by requiring you to provide only a year’s worth of personal and business bank statements.
• You can borrow more, skip the tax forms, and avoid tricky paper trails.

Ready to see if you qualify? Call Gustan Cho Associates at 800-900-8569 or hit Apply Now. We’ll walk you through the process and get your pre-approval moving.

FAQ: 12-Month Bank Statement Mortgage For Self-Employed Borrowers

What is a 12-Month Bank Statement Mortgage?

• A 12-month bank statement mortgage utilizes statements from the past year instead of traditional income verification documents like tax returns or pay stubs.
• It’s commonly favored by self-employed individuals or those with unconventional income sources.

How Does It Work?

• Lenders assess income stability and repayment ability by scrutinizing bank statements.
• Borrowers provide detailed statements and meet additional requirements such as a strong credit score and sufficient down payment.

How Can I Obtain My Bank Statements for a Mortgage?

• You can access statements through online banking portals or mobile apps, request physical copies at a bank branch (may incur fees), or contact customer service for electronic copies.

What is a Bank Statement for a Loan?

• A bank statement for a loan outlines financial activity within an account over a set period.
• Lenders require recent statements to assess income stability, spending habits, and financial health.

What Are the Eligibility Criteria for Bank Statement Mortgages?

• Borrowers typically need three established credit tradelines, verification of rent, debt-to-income ratios below 50%, and a down payment ranging from 10% to 30%, depending on credit scores and property type.

What Are the Benefits of Bank Statement Mortgages?

• These mortgages are for borrowers exceeding government and conforming loan limits, those with late payments, or individuals who do not meet the waiting period after financial setbacks like bankruptcy or foreclosure.

What is an Interest-Only Bank Statement Mortgage?

• This mortgage requires borrowers to pay only interest for a specified period (usually 5-10 years), resulting in lower initial payments.
• However, payments may increase substantially once the interest-only period ends.

For more information about our bank statement mortgage programs at Gustan Cho Associates, please call 800-900-8569 or text us for a faster response. You can also email us at alex@gustancho.com. The Team at Gustan Cho Associates is available seven days a week, evenings, weekends, and holidays.

This blog about the 12-Month Bank Statement Mortgage For Self-Employed Borrowers was updated on September 15th, 2025.