You run a real business. Your bank account shows healthy deposits every month. But when a traditional lender opens your tax returns, they see a fraction of that — because your CPA did exactly what you hired them to do.
The result is familiar to a lot of Connecticut business owners: you can comfortably afford the house, but your returns say otherwise. A bank statement loan exists for exactly that gap.
Instead of tax returns, we review 12 or 24 months of your bank statements and build qualifying income from your actual deposits.
The basic math: total qualifying deposits over the period, divided by the number of months, then reduced by an expense factor that reflects what it costs to run your type of business. What is left is the monthly income your file is built on.
No tax returns. No W-2s. No pay stubs. No employment verification.
This is the part most articles skip, and it is usually what decides whether a deal works.
A lender assumes some share of your deposits goes back out as business expenses. A consultant with almost no overhead might see an expense factor near 10 to 15%. A contractor buying materials on every job might see 40 to 50%. Same deposits, very different qualifying income.
Some programs will use a lower factor if your CPA provides a signed profit-and-loss statement or a letter stating your actual expense ratio. If your overhead is genuinely low, that one document can change what you qualify for. Ask about it early rather than after the file is running.
Business accounts. Deposits are counted, then the expense factor is applied. Best when most of your revenue lands in the business account.
Personal accounts. Transfers from the business into your personal account are often counted more directly, since money that reached you personally has already cleared business expenses. Better for some owners, worse for others.
If you have both, we look at both and use whichever presents your income more accurately. There is no rule saying you must pick the one that hurts.
Not every dollar that lands in the account counts. Generally counted: customer payments, client transfers, regular revenue deposits.
Generally excluded: transfers between your own accounts, loan proceeds, one-time asset sales, tax refunds, gifts, and any large deposit you cannot document as revenue.
This is why the cleanest files come from borrowers who keep business and personal money separate. Commingled accounts do not disqualify you, but they take longer and invite more questions.
Most programs look for at least two years of self-employment history and a credit score starting in the low-to-mid 600s. Down payments generally begin around 10 to 20% depending on the program and your profile. Reserves are usually required.
All terms are subject to program guidelines and review by our Approval Team. Nothing here is an approval or an offer of specific terms.
Bank statement loans price higher than a conventional loan, because the documentation is non-traditional and the lender is holding more risk. That is the honest trade.
But the comparison that actually matters usually is not bank statement versus conventional — if your returns do not support the loan, conventional is not on the table. The real comparison is bank statement financing versus waiting two more years.
Many borrowers treat it as a bridge: buy now with bank statements, spend a couple of years documenting income differently, then refinance into conventional financing once the returns support it. Buying the house is the part you cannot get back.
Most programs use 12 or 24 months. Twenty-four months can strengthen a file with seasonal swings, since it smooths out slow stretches.
Usually not. Deposits that are not recurring business revenue are typically excluded, and unexplained large deposits raise questions. Document anything unusual up front.
Sometimes, though a DSCR loan is often the better tool for a rental, because it qualifies the property rather than you.
No, but many borrowers choose to refinance once their documented income supports it. There is no requirement to.
Not automatically. That is part of why 24-month options exist. Tell us about it early so we can look at the right window.
No Social Security number, no hard credit pull — just a real starting point based on your actual situation.
Get started here, or call (203) 452-9899 and we will run your deposit math before you go looking at houses.
AFC Mortgage Group is a family-owned Connecticut lender, based in Monroe since 1998, with a 4.9-star rating across 461+ Google reviews. We have run hundreds of non-traditional income files.
Written by Gaetano Ciambriello, Home Finance Advisor at AFC Mortgage Group (NMLS #1783508).
AFC Mortgage Group LLC | NMLS #2801 | Monroe, CT | Equal Housing Lender.
This article is for educational purposes only and is not a commitment to lend. It does not constitute financial, tax, or legal advice. Program guidelines, terms, and availability vary and are subject to change. All loans are subject to credit approval, property approval, and Approval Team review. Consult your tax professional regarding your specific situation.
Become homeowners. AFC Mortgage Group will help you navigate the loan process, secure financing, and purchase your dream home.
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