You can use some bank statement loan programs to buy or refinance an investment property.
Instead of relying primarily on the income shown on your tax returns, the lender reviews eligible deposits in personal or business bank accounts to estimate qualifying income.
This can be useful for self-employed investors whose business produces strong recurring cash flow but whose taxable income is reduced by legitimate business expenses.
Bank statement loans are one form of non-QM investment property financing. They still involve underwriting, including a review of credit, assets, debts and the property.
Bank Statement Investment Property Loan Basics
| Feature |
How It Generally Works |
| Primary income documentation |
Eligible deposits from personal or business bank statements |
| Statement period |
Often 12 or 24 months, depending on the program |
| Business expenses |
Accounted for using a lender-specific expense factor or other permitted calculation |
| Tax returns |
May not be used as the primary income calculation under some programs |
| DTI |
Generally calculated using the qualifying income derived from the bank statements |
| Down payment |
Program-specific |
| Credit requirements |
Program-specific |
| Reserves |
Program-specific |
| Eligible occupancy |
Can include investment properties under some programs |
A bank statement mortgage changes how income is documented. It does not remove the need to demonstrate that you can support the loan.
How a Bank Statement Loan Works on an Investment Property
The lender reviews a defined period of bank statements and identifies deposits that can reasonably be treated as income.
Programs commonly use 12 or 24 months of statements, although there is no universal requirement.
The lender may use personal statements, business statements or either, depending on the program and how you receive income.
Business deposits usually require an additional step.
The lender needs to account for the expenses required to operate the business rather than treating every dollar deposited as personal income.
That can be done through an expense factor or another program-approved method.
Bank Statement Income Example
Suppose a business has $480,000 in eligible deposits over 12 months.
That averages $40,000 per month.
For illustration, assume the loan program determines that 50% of those deposits represent business expenses.
The calculation would be:
$40,000 × 50% = $20,000 in estimated monthly business expenses
$40,000 − $20,000 = $20,000 in qualifying monthly income
| Example |
Amount |
| Average monthly eligible deposits |
$40,000 |
| Hypothetical expense factor |
50% |
| Estimated business expenses |
$20,000 |
| Illustrative qualifying monthly income |
$20,000 |
The 50% expense factor is an example, not an industrywide requirement.
A different lender could apply a different expense factor or allow other documentation to establish operating expenses.
Who Bank Statement Investment Property Loans Can Fit
Bank statement financing is most relevant when the borrower's documented cash flow is stronger than the income produced by a traditional tax-return calculation.
A business owner may have substantial recurring deposits while also claiming legitimate deductions for equipment, vehicles, depreciation or other expenses.
An independent contractor may have strong monthly receipts but variable taxable income from year to year.
A self-employed investor may also have several income streams that do not fit cleanly into a W-2-based file.
Those borrowers have several ways of financing an investment property without W-2 income, and bank statements are only one option.
If tax returns already support the loan, conventional financing may still be available.
Down Payment and Reserve Requirements
There is no universal down-payment requirement for a bank statement investment property loan.
The maximum LTV is set by the lender or investor and can depend on credit, loan amount, property type and other underwriting factors.
Investment-property occupancy can also affect the amount of equity required compared with an owner-occupied transaction.
That is different from conventional financing, where agency maximum LTVs establish a 15% minimum down payment on an eligible 1-unit investment property and 25% on a 2- to 4-unit property.
Bank statement loans can require cash reserves as well.
The amount varies by program and can be based on a specified number of months of the property's housing payment.
Those cash reserves remain available after closing, so they are separate from the down payment and closing costs.
Qualifying Requirements
Bank statement loans still evaluate the borrower.
Credit history can affect eligibility, maximum LTV and pricing.
The lender can also calculate a debt-to-income ratio using the qualifying income produced from the bank statement analysis.
Self-employment history may be required to show that the deposits come from an established and continuing source.
The exact credit score, DTI limit and required business history vary by lender.
That means figures such as a 660 credit score, 50% DTI or two years in business should not be treated as universal bank statement loan rules.
A lender can also apply different requirements to an investment property than it would to a primary residence.
Bank Statement vs. DSCR for an Investment Property
A bank statement loan and a DSCR loan can both work for real estate investors, but they qualify the transaction in different ways.
| Feature |
Bank Statement Loan |
DSCR Loan |
| Main qualification focus |
Your personal or business cash flow |
The rental property's cash flow |
| Primary income documentation |
Eligible bank deposits |
Qualifying rental income |
| Personal DTI |
Generally part of qualification |
May not be the primary qualification test |
| Property cash flow |
Relevant but not necessarily the main income test |
Central to the DSCR calculation |
| Credit |
Program-specific |
Program-specific |
| Down payment |
Program-specific |
Program-specific |
| Reserves |
Program-specific |
Program-specific |
If your business or personal deposits provide the stronger financial picture, a bank statement loan may make more sense to evaluate.
If the property's rental income is the stronger part of the transaction, a DSCR loan can put more weight on the property itself.
A property can fail one approach and still fit the other.
For example, a rental with relatively weak cash flow may not meet a DSCR lender's required ratio, while strong personal business income could still support the loan under a bank statement program.
How Bank Statement Loans Compare With Conventional Financing
Conventional and bank statement loans differ primarily in how they establish your income.
For a conventional mortgage, Fannie Mae generally evaluates self-employed income using federal tax returns and a cash-flow analysis of the business.
Certain expenses can be added back under agency rules, so mortgage qualifying income is not always identical to taxable net income.
Bank statement underwriting instead starts with eligible deposits and applies the program's method for estimating expenses.
That difference can be significant for a borrower whose recurring business cash flow is much higher than the income supported by conventional tax-return analysis.
The gap between those two calculations is central when comparing conventional and bank statement financing for a rental property.
What Bank Statement Loan Documents Do You Need?
The exact documentation varies by program, but the lender generally needs enough information to verify the source and consistency of the deposits being used.
That can include:
- 12 or 24 months of complete personal or business bank statements, depending on the program
- Documentation showing ownership of the business
- A business license or other evidence that the business is active when required
- Documentation supporting the applicable business-expense calculation
- Asset statements for the down payment, closing costs and reserves
- Property and rental documentation required for the investment property
Some programs can require additional documentation based on the business, borrower or property.
A complete self-employed mortgage file can therefore look different depending on whether conventional tax returns or alternative bank statement documentation is being used.
Which Bank Deposits Count as Income?
A lender does not simply total every deposit appearing on your statements.
The deposits need to represent income that the program permits the lender to use.
Recurring business receipts or qualifying personal income deposits can potentially count.
Transfers between your own accounts generally should not be counted again as new income.
Loan proceeds do not represent earned business income.
One-time deposits that cannot be tied to an eligible recurring income source may also be excluded.
Unusual deposits can require additional documentation before the lender determines whether they should be included.
The goal is to avoid overstating cash flow by counting money that does not represent recurring income.
Personal vs. Business Bank Statements
Some programs allow personal bank statements. Others can use business statements.
The distinction matters because the lender may analyze them differently.
Personal statements can contain deposits that have already been distributed from the business to the borrower.
Business statements show gross cash flowing into the company, which means operating expenses generally have to be accounted for before the lender arrives at qualifying income.
A borrower should not assume that $30,000 in monthly business deposits translates into $30,000 of monthly qualifying income.
The lender's expense methodology determines how much remains available for qualification.
What About Tax Returns?
Bank statement programs are designed to offer an alternative to relying primarily on a traditional tax-return income calculation.
That does not mean every program promises that tax returns will never be requested for any purpose.
The lender can require other documents needed to verify the borrower, business, assets or loan eligibility.
The important distinction is how qualifying income is calculated.
With a bank statement program, eligible deposits rather than conventional taxable-income calculations provide the primary basis for determining income.
Other Non-QM Options for Investors
Bank statements are not the only alternative when conventional income documentation does not fit.
An investor with substantial liquid assets but limited monthly income may be able to qualify using an asset qualifier loan.
An independent contractor paid primarily on Form 1099 may find that a 1099-based loan produces a simpler income calculation than bank statements.
Some self-employed borrowers can also qualify using a profit and loss statement under programs that permit that documentation.
Each method solves a different income-documentation problem.
Costs and Loan Terms
Bank statement loans can have different pricing from a full-documentation conventional mortgage.
There is no universal rate premium.
Pricing can depend on credit, LTV, property type, occupancy, loan amount and other program factors.
The available loan structure can also vary. Some programs may offer fixed-rate terms, adjustable-rate mortgages or both.
Some business-purpose investment-property loans can include prepayment penalties when permitted by the loan terms and applicable law.
That provision matters if you expect to sell or refinance relatively quickly.
Compare the rate, points, lender fees, cash required at closing, reserves and any prepayment terms rather than relying only on the monthly payment.
Bottom Line
Bank statement loans can finance investment properties under some lender programs.
They are most useful when your personal or business deposits show stronger recurring cash flow than a traditional tax-return calculation.
The lender still reviews the complete transaction, including credit, debts, assets and the property.
Down payment, reserves, credit requirements and pricing vary by program rather than following one nationwide bank statement standard.
If the property's rental cash flow is stronger than your own documented deposits, DSCR financing may provide a different qualification path.
FAQ
Can You Buy a Rental Property With a Bank Statement Loan?
Yes. Some bank statement programs allow non-owner-occupied investment properties. The lender uses eligible personal or business deposits to estimate qualifying income and still reviews factors such as credit, debts, assets, down payment and the property itself.
How Much Down Payment Do You Need for a Bank Statement Investment Property Loan?
There is no universal minimum down payment. Bank statement programs set their own maximum LTVs, and the requirement can change based on credit, loan amount, property type and occupancy. Investment properties can require more equity than comparable owner-occupied transactions.
Is a Bank Statement Loan or DSCR Loan Better for a Rental Property?
It depends on which income source produces the stronger application. A bank statement loan focuses on your personal or business cash flow. A DSCR loan focuses more directly on the rental property's income relative to its debt. Compare both when either qualification method could work.
Do Bank Statement Loans Require Tax Returns?
Some bank statement programs do not rely on tax returns to calculate qualifying income. Instead, they use eligible deposits from a required period of personal or business statements. Other documentation may still be required, so the specific program determines what the lender needs.
Can You Use Personal Bank Statements Instead of Business Statements?
Some programs allow personal bank statements, while others permit business statements or offer both options. The calculation can differ because business deposits generally have to be adjusted for operating expenses before they are treated as qualifying income.
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