If you’re self-employed, a freelancer, or a business owner in California, you’ve probably discovered that getting a mortgage isn’t going to be easy. Traditionally, lenders rely on W-2 income and tax returns, which often don’t reflect your true earnings after deductions and write-offs. That’s where bank statement loans come in if you’re an entrepreneur or a freelancer, a powerful solution designed specifically for borrowers who want to buy a home without the roadblocks of conventional financing. Let’s talk about what you need to know about bank statement loans.
What Is a Bank Statement Loan?
A bank statement mortgage allows borrowers to qualify for a home loan using personal or business bank statements instead of tax returns. Lenders review 12–24 months of statements to calculate your average monthly income, giving a more accurate picture of your cash flow and financial health.
Who Are Bank Statement Loans For?
A bank statement loan just might be the right solution for you if you need a creative alternative solution .This type of loan is ideal for:
- Entrepreneurs and small business owners
- Freelancers and independent contractors
- Gig economy workers
- Self-employed professionals with fluctuating income
If you’re not sure if it’s right for you, you can talk with one of our loan officers any time to learn more. We’ve also answered some of the most frequently asked questions here.
FAQs About Bank Statement Mortgages
1. How do lenders calculate income with a bank statement loan?
Lenders typically average deposits from the past 12 to 24 months of bank statements. Depending on whether you use personal or business accounts, they may also apply an expense ratio (to account for business costs). This gives a realistic view of your earning power without relying on tax returns.
2. What credit score do I need for a bank statement mortgage?
While requirements vary by lender, many bank statement loan programs in California accept credit scores as low as the mid-600s. Higher scores may give you access to better rates and terms. We can talk about your specific situation.
3. How much do I need for a down payment?
Most bank statement loans require a down payment of 10%–20%, depending on your credit profile, property type, and loan size. Some jumbo bank statement loans may require a larger down payment.
4. Are bank statement loans more expensive?
Because they’re considered “non-QM loans” (non-qualified mortgages), bank statement loans may carry slightly higher interest rates than traditional loans. However, they give self-employed buyers access to homeownership when conventional financing isn’t an option — often making them worth the trade-off.
5. Can I use a bank statement loan for an investment property or second home?
Yes. Many bank statement loan programs allow you to finance primary residences, vacation homes, or even investment properties, depending on your goals. You may also want to look into a Cash Flow Investor Loan for this.
Benefits of a Bank Statement Loan
In short, here’s why you might want to consider a bank statement loan:
- No need to provide tax returns, W-2s, or pay stubs
- Flexible income documentation
- Available for high loan amounts (jumbo loans)
- Options for primary, secondary, or investment properties
Not every lender offers bank statement mortgages in California. As a mortgage expert who specializes in self-employed borrowers and non-QM loan programs, I can help you navigate requirements, compare programs, and secure the best financing solution for your unique situation.
If you’re a freelancer, entrepreneur, or small business owner struggling to qualify with a traditional lender, a bank statement loan could be the key to homeownership. Instead of forcing your income into a W-2 box, these programs highlight your real financial strength.
Ready to explore your options? Reach out today to learn how a bank statement mortgage can make buying a home in California possible for you.
