Question 1

How do lenders calculate income from bank statements?

Accepted Answer

They average your monthly deposits over 12 or 24 months, then deduct 25-50% for business expenses. The remainder becomes your qualifying income.

Question 2

Can I use personal bank statements instead of business accounts?

Accepted Answer

Yes, but business accounts produce cleaner income calculations. Personal accounts work if you can explain large deposits and separate business from personal activity.

Question 3

What if I only have 10 months of self-employment history?

Accepted Answer

Most bank statement programs require 12 months minimum. You might qualify for a different non-QM product or need to wait until you hit the 12-month mark.

Question 4

Do overdrafts or NSF fees disqualify me?

Accepted Answer

Not automatically, but they raise red flags. Multiple overdrafts suggest cash flow problems and may push you toward stricter guidelines or higher rates.

Question 5

How much higher are rates compared to conventional loans?

Accepted Answer

Expect rates 1-2.5% higher depending on credit, down payment, and market conditions. Rates vary by borrower profile and market conditions.

Question 6

Can I combine bank statements with other income documentation?

Accepted Answer

Some lenders allow it, but most use one method per loan. If bank statements show strong income, they'll typically ignore tax returns showing lower figures.

Bank Statement Loans in West Sacramento: Income Verification for Self-Employed Borrowers