Qualify using 12 or 24 months of personal or business bank deposits — no tax returns required. The flagship Non-QM program for self-employed business owners, contractors, and commission earners whose tax returns understate true cash flow due to write-offs.
A bank statement loan is a Non-QM (Non-Qualified Mortgage) program that lets self-employed borrowers, business owners, contractors, and commission earners qualify based on 12 or 24 months of bank deposits instead of tax returns. Tax returns understate the true income of many self-employed Texans because of legitimate write-offs and accelerated depreciation — bank statement loans solve that problem by qualifying based on cash actually flowing through your accounts.
The lender calculates qualifying income by adding up qualifying deposits across 12 or 24 months, then applying an expense factor (typically 50% by default, but lower for service businesses, higher for capital-intensive businesses) to determine your monthly income for DTI purposes. No K-1s, no Schedule C deep-dive — just deposits.
This is Texas's most-used Non-QM program for self-employed borrowers. Roughly 6 in 10 Texas Non-QM loans are bank statement loans, with Angel Oak, Newfi, and Deephaven being the most active wholesale lenders.
Texas business owners whose tax returns understate true cash flow due to depreciation, Section 179, vehicle write-offs, home office deductions, and other legitimate IRS-allowed reductions. Restaurant owners, contractors, real estate professionals, freelance consultants, e-commerce sellers, doctors with private practices, and law-firm partners typically benefit most.
| Tier | Statements | Min Credit | Max LTV — Purchase | Max LTV — Cash-Out | Typical Rate |
|---|---|---|---|---|---|
| Premium | 12 mo | 740+ | 90% | 80% | 7.875% |
| Standard | 12 mo | 700–739 | 85% | 75% | 8.125% |
| Standard | 24 mo | 660–699 | 80% | 75% | 8.375% |
| Tier-3 | 24 mo | 620–659 | 75% | 70% | 9.000%+ |
| Subprime | 24 mo | 600–619 | 70% | 65% | 9.500%+ |
*Matrices vary by lender. Angel Oak typically aggressive at 700+ tier; Newfi competitive at 660–699; Deephaven strong on premium 740+. Texas wholesale rates run 0.25–0.50% below retail.
The lender calculates monthly qualifying income from your deposits using one of three methods:
| Method | Formula | Best For |
|---|---|---|
| Personal Statements | Sum of qualifying deposits ÷ months reviewed | Income flows directly to personal accounts |
| Business Statements | Sum × (1 − Expense Factor) ÷ months | Most common — true business deposits |
| Combined | Blended calculation across both accounts | Mixed business + personal flow |
$80,000 × (1 − 0.50) = $40,000/mo qualifying income = $480,000 annual. At 43% DTI cap, this supports approximately $17,200/mo total debt including new PITIA. On a $1M loan at 8.125% (30-yr), P&I is ~$7,400 — leaving headroom for taxes, insurance, and existing debts.
| Business Type | Typical Expense Factor | Effective Income |
|---|---|---|
| Service business (consulting, real estate agent, attorney) | 10–25% | 75–90% of deposits |
| Default factor (most lenders) | 50% | 50% of deposits |
| Restaurant / retail | 50–65% | 35–50% of deposits |
| Construction / capital-intensive | 60–75% | 25–40% of deposits |
| CPA-attested expense ratio | Actual % | Varies — lender accepts CPA letter |
*A CPA letter attesting to your business's actual expense ratio can dramatically lower the expense factor (and raise your qualifying income). For service businesses, this single letter can be worth 20–30% additional qualifying income.
April 2026 illustrative rates. Contact Ethan for current personalized pricing.
720 credit · Restaurant 5 yrs · Returns show $48K, deposits show $35K/mo
740 credit · 6 yrs sales · CPA letter for 20% expense factor
680 credit · Construction · $48K/mo deposits · TX homestead 50(a)(6)
760 credit · 1099 + S-Corp · $42K/mo · Wants 90% LTV
700 credit · Bank statement + DSCR hybrid · Multi-property
720 credit · W-2 + small side business · Tax returns look fine
Not all bank deposits count toward qualifying income. The underwriter excludes:
| Deposit Type | Counts Toward Income? | Notes |
|---|---|---|
| Customer payments / business revenue | Yes | Core qualifying flow |
| Direct deposits from 1099 work | Yes | Self-employed contractor income |
| Cash deposits (if from business) | Yes (limited) | Must show pattern + source |
| Transfers from other accounts | NO | Major flag — would double-count |
| Loan proceeds (HELOC, personal loan, business loan) | NO | Excluded as borrowed funds |
| Gifts or transfers from family | NO | Not earned income |
| Investment account withdrawals | NO | Asset access ≠ income |
| Tax refunds | NO | Return of capital, not income |
| Insurance / lawsuit settlements | NO | One-time events |
If you regularly move money between business and personal accounts, those transfers do not count as income. They get excluded by the underwriter and can dramatically reduce your qualifying deposit total. Solution: keep business income flowing to ONE primary account during the 12 or 24 months prior to applying. Don't move money around right before applying — clean, predictable deposits maximize your qualifying number.
A licensed CPA letter can transform a marginal bank statement file into a strong one. The most valuable CPA letters address:
For service businesses (real estate, consulting, law, IT services), a CPA letter attesting to a 20% (or lower) expense ratio can raise qualifying income by 30%+ vs the default 50% expense factor. On $300,000 in annual deposits, that's the difference between $150K qualifying (default) and $240K qualifying (CPA letter at 20%). The CPA charges $300–$500 for the letter — easily the highest ROI document in the entire loan file.
*Illustrative only — actual qualifying calculations vary by lender and require manual underwriting review. Texas 50(a)(6) homestead cash-out adds additional rules. Contact Ethan for precise lender-specific analysis.
Not every wholesale lender does bank statement loans well. The ones below are NEXA's top Texas-active partners for this product, ranked by typical pricing and ease of close.
Unlike conventional loans (where Fannie/Freddie set uniform pricing across lenders), Non-QM lenders price independently. The same borrower profile can vary 0.50–1.0% in rate between lenders. NEXA's access to 6+ active bank statement lenders means Ethan can shop the exact same file across multiple pricing engines and pick the best result.
| Factor | Bank Statement (Non-QM) | Conventional | FHA |
|---|---|---|---|
| Tax Returns Required? | NO — bank deposits qualify | Yes (2 yrs) | Yes (2 yrs) |
| Min Credit Score | 660 (down to 600) | 620 | 580 |
| Typical Rate | 8.0–8.5% | 6.5–7.0% | 6.5–7.0% |
| Max LTV — Purchase | 90% (top tier) | 97% (3% down) | 96.5% (3.5% down) |
| Max LTV — Cash-Out | 80% | 80% (TX 50(a)(6)) | 80% |
| Mortgage Insurance | None (above 80%) | PMI if >80% | Lifetime MIP |
| DTI Cap | 43–50% | 50% | 50%+ |
| Reserves | 3–6 mo PITIA | 0–2 mo | 1 mo |
| Best Profile | Self-employed, returns understate income | W-2 employee or strong returns | Limited down / lower credit |
Bank statement loans typically price 1.0–1.5% higher than conventional loans at similar credit/LTV. On a $500,000 loan, that's ~$450/month more, or ~$162,000 over 30 years. Bank statement makes sense ONLY when one of these is true:
Many Texas self-employed borrowers use a bank statement loan to buy the home they want NOW, then refinance to conventional 24–36 months later once their tax returns reflect 2 years of stronger reported income. The 18–24 month break-even on the rate difference is usually crossed by refinancing — making bank statement a viable bridge product, not a permanent solution. Ethan tracks rate environments and proactively suggests refinance windows.
| Phase | Standard | Expedited | Notes |
|---|---|---|---|
| Pre-Qual to LE | 3–5 days | 1–2 days | Faster with all docs ready |
| Deposit Analysis | 3–5 days | 2–3 days | Manual review |
| Underwriting | 7–14 days | 5–7 days (priority) | Manual UW typical for Non-QM |
| Appraisal | 7–14 days | 5–7 days (rush) | No PIW on Non-QM |
| Conditions Cleared | 3–5 days | 2–3 days | Respond fast to UW |
| CD to Closing | 3 days (federal) | 3 days (mandated) | Cannot waive |
| Total | 25–35 days | 18–24 days | Texas 50(a)(6) adds 12 days |
Many self-employed borrowers move money between business and personal accounts regularly. The underwriter excludes these transfers from qualifying deposits — and on personal statements, this can wipe out 30–50% of the deposit base. Solution: 12 months before applying, keep business income flowing to ONE primary account (preferably business). Don't shuffle money around. If you've already been moving money, switch to 24-month statement program or use business account only.
The default 50% expense factor on most lender programs is often punitive for service businesses (consulting, real estate, attorneys, IT). A CPA letter attesting to a 15–25% actual expense ratio routinely raises qualifying income by 30–40%. Solution: Always get a CPA letter before applying — a $300–$500 spend that pays for itself in higher qualifying income (and often a lower rate tier).
If business income flows to a personal account that also receives spouse's W-2 deposits, family gift transfers, and tax refunds, the underwriter has to disentangle qualifying vs non-qualifying deposits. This often leads to disputes over qualifying income calculation. Solution: Maintain clean separation. Run business income to business account, salary to personal account. Bank statement loans favor clean account structure.
A $40,000 deposit in one month when monthly average is $15,000 raises a flag. Underwriter assumes it's a loan or gift unless proven otherwise. Solution: For project-based businesses with lumpy income, use 24-month statements (smooths out lumpiness) and have documentation ready explaining large deposits (contracts, invoices, client agreements).
Bank statement loans qualify based on deposits — but after closing, your monthly payment is real. Many borrowers qualify for $850K on bank statement math but stretch into the house, then struggle when seasonal business dips happen. Solution: Stress-test your payment against your worst 3-month period in the past 2 years. If a slow quarter would mean borrowing against credit cards to cover mortgage, you're buying too much house.
The 1.0–1.5% rate premium over conventional is permanent until you refinance. On a $600,000 loan, that's $500/month or $180,000 over 30 years. Solution: Plan a refinance to conventional 24–36 months after closing — once your tax returns show 2 years of strong reported income that supports conventional DTI. Most Texas bank statement borrowers refinance within 3 years.
Bank statement loans must still meet federal "Ability to Repay" (ATR) standards under Dodd-Frank — even though they're Non-QM. A lender that doesn't document ATR properly creates legal risk. Solution: Stick with established Non-QM lenders (Angel Oak, Newfi, Deephaven, Acra) that have rigorous ATR documentation processes. Avoid no-name "private money" lenders for owner-occupied properties.
If you're doing a bank statement cash-out on your Texas homestead, the 50(a)(6) constitutional rules apply: 80% LTV cap, 12-day notice, in-person closing, 2% closing-cost cap, spousal joinder, "once 50(a)(6), always 50(a)(6)." Non-QM lenders that aren't Texas-experienced sometimes miss these requirements. Solution: Use Flagstar or another Texas-50(a)(6)-experienced wholesale partner for bank statement cash-out on TX homestead.
Ethan analyzes your bank deposits in 24 hours and tells you which lender programs will accept your profile and at what rate. Free initial review.
