Bank Statement Loans in 2025: No Tax Returns Needed

Self-employed and 1099 earners don't live in W-2 land. Your cash flow is real, but your tax returns are built to minimize taxable income—not to impress a mortgage underwriter. That's where bank statement loans come in. In 2025, they're one of the cleanest ways for business owners, gig workers, realtors, investors, and freelancers to qualify using deposits instead of tax returns.

Let's break it down in plain English.

What is a bank statement loan?

A bank statement loan lets you qualify for a mortgage using 12 or 24 months of personal or business bank statements to calculate income. Instead of reviewing tax returns, underwriters look at actual deposits, apply reasonable business expense factors or a CPA-prepared P&L, and derive a monthly qualifying income number. Same collateral (your house), same mortgage—just a different way to document income.

Good fit for:

• •Business owners and 1099 earners with lots of write-offs
• •Realtors/LOs with seasonality and commission spikes
• •Gig/creator economy and contractors
• •Investors moving between projects or using multiple entities

Not a good fit if your deposits are inconsistent with what you actually earn, you can't document business activity, or you're trying to "qualify first, figure it out later." This is still fully underwritten lending—just without tax returns.

12 vs. 24 months: which should you pick?

• •
  12 months = faster, less paperwork, works when your last year was strong or trending up.
• •
  24 months = smooths seasonality and can increase usable income if the prior year was better than the most recent few months.

Rule of thumb: if your most recent 6–9 months are clearly higher and sustainable, 12 months often wins. If you had a dip or heavy reinvestment period, 24 months can average it out.

Personal vs. business statements

You can qualify with personal or business statements:

• •
  Personal statements count eligible business deposits flowing into your personal account. Generally fewer overlays and a smaller "expense haircut" because most expenses were already paid from the business before funds hit your personal account.
• •
  Business statements start with gross business deposits, then apply an expense factor (typically 10%–50%, commonly 30%–40%) unless you provide a CPA-prepared P&L that supports a lower expense ratio. After expenses, the net is divided by 12 or 24 to get monthly income.

How income is calculated (the short version)

1. Add up eligible deposits for the period (exclude transfers, refunds, Zelle from yourself, intra-account moves).
2. Subtract business expenses using either:
   • A standard expense factor set by the lender, or
   • A CPA-signed P&L supporting a lower expense ratio for your industry.
3. Divide by 12 or 24 = qualifying monthly income.

Qualifying checklist (what underwriters look for)

• •
  FICO: Common minimums start around the mid-600s; stronger credit improves LTV and pricing.
• •
  LTV/Down Payment: Expect max LTVs typically in the 80–90% range on primary; lower on second homes/investments.
• •
  Reserves: Often 3–12 months of PITIA depending on credit, LTV, and occupancy.
• •
  Business Seasoning: Usually 2 years self-employed/1099, though some programs allow 1 year with strong files.
• •
  Eligible Properties: 1–4 unit, warrantable condos; non-warrantable or condotels possible with niche programs.
• •
  Occupancy: Primary, second home, and investment allowed (guidelines vary).
• •
  DTI: Often capped around 43%–50% depending on compensating factors.

None of this is "one size fits all." Different lenders = different overlays. Our job is to match your profile to the right box.

Documents you'll actually need

• •12 or 24 months of consecutive bank statements (PDF downloads, all pages)
• •Photo ID and business docs (LLC/Corp/DBA, business license if applicable)
• •VOE (verification of self-employment), e.g., website, CPA letter, active business license
• •Mortgage docs: credit pull, asset statements for reserves, purchase contract (if applicable)
• •P&L (optional but often helpful), CPA letter if using reduced expense factor

Real math example (simplified)

Which is better depends on your trendline and what your DTI needs to be for the property you want.

Common pitfalls (and how to avoid them)

• •
  Transfers = income? No. Underwriters net out self-to-self moves. Keep business and personal cleanly separated.
• •
  Large "mystery" deposits. Document them. If it's a client payment, show invoice/contract.
• •
  Cash deposits. Usually excluded unless clearly business-related and consistent.
• •
  NSFs/overdrafts. Too many is a red flag.
• •
  Intermittent activity. Seasonal is fine; "dead months" aren't. We may switch to 24 months or use personal statements.
• •
  Commingled funds across multiple entities. We can qualify with multiple accounts, but we need a clean paper trail.

Bank statements vs. other "non-QM" options

• •
  P&L-Only Loans: Some programs allow a CPA-prepared P&L without bank statements, or with a shorter bank statement support period. Faster, but needs a strong CPA and clean story.
• •
  1099-Only Loans: If you're primarily paid on 1099s, certain programs let us average your 1099s directly.
• •
  DSCR (for investors): If the target is a rental, we might skip income docs entirely and qualify off the property's cash flow (rent vs. payment). Different tool; great for portfolio growth.

What about rates and costs?

Non-QM programs price different than agency loans. Credit, LTV, reserves, doc type, and occupancy all move the needle. We'll map your file across multiple investors and show apples-to-apples—but we will never quote an interest rate without APR and we won't guess before we run your full scenario.

How we'll structure your approval path

1. 1
   Quick Discovery Call (10–15 min):

   Understand goals, timeline, and property type.

2. 2
   Document Pull:

   Bank statements + basics listed above.

3. 3
   Income Strategy:

   Choose 12 vs. 24 months; personal vs. business; standard vs. CPA expense factor.

4. 4
   Lender Match:

   We map your profile to the best-fit investors, guidelines, and turn times.

5. 5
   Pre-Approval & Realtor Alignment:

   Solid letter that actually closes.

6. 6
   Close & Future Planning:

   We'll revisit structure later if you want to refinance into agency once your tax returns catch up.

Rockhouse Mortgage, LLC | NMLS #2469785 | Harry Hager, NMLS #647108
Equal Housing Lender. All loans subject to credit approval and program guidelines. Terms subject to change without notice. Not a commitment to lend.