Bank Statement Loans

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Bank Statement Loans

Bank Statement Loans are The HOLY GRAIL in the Non-QM mortgage loan space. Valor Lending Group’s bank statement loans are geared to benefit self-employed individuals, gig workers, investors, and independent contractors. Since 2020 we have seen a surge in the “gig working” economy, there has been millions of Americans that have tried “gig work” and now 36% of US workers are dabbling in and succeeding, that is more than one-third of US workers. The typical 9AM-5PM job is slowly moving out of popularity and the new trend is working for yourself. Who doesn’t want to work in their own time with no cap on the number of hours they can put in? Uber, Lyft, Etsy, social media influencing, and any home-based business is a growing trend for Americans today. This career choice is climbing to the top of the charts, and it is only expected to keep growing. Unfortunately, most mortgage industry automated underwriting processes are built towards borrowers with annual W2’s and pay stubs which is not beneficial to the new age self-employment.

Have no fear self-employed individuals, gig workers, investors, and independent contractors, because this is where the bank statement loans really Shine. These loan programs do NOT require W2’s, pay stubs or tax returns. There are many different types of loan programs that fall under the Stated Income Loan tree including 12–24-month Bank Statement Loans, TRUE Stated Income Loans, DSCR Loans, P&L Loans, 1099 Loans and more. In the sections below, you will find further explanation into the differences between these programs and their benefits.

12-24 Month Bank Statement Loans

A. What is a 12–24-month Bank Statement Loans?

These are not the type of loans that were prevalent in the pre-2008 financial crisis, and no longer are the days in which loan applicants can simply state their income on a loan application with virtually no due diligence conducted by the lender. After the 2008 financial crisis, the sweeping provisions of Dodd-Frank changed the industry substantially, at least in the owner-occupied residential context. Since 2010 Dodd-Frank has required lenders to document a residential borrower’s ability to repay the loan. Bank statement lenders still want to ensure borrowers can repay their mortgages; they just use bank statements to verify income as opposed to tax returns. Self-employed borrowers are able to document their ability to repay based on business deposits into their personal or business bank accounts, i.e., their true cash flow.

B. Why use Bank Statement Loans?

1) The Difference

Traditional mortgage lenders require tax returns, W-2s, and paycheck stubs in order to determine monthly income. For salaried and hourly borrowers, the lenders look at gross income for qualifying purposes. But for self-employed borrowers, traditional mortgage lenders look at net income, the adjusted gross income showing on tax returns. This puts self-employed borrowers at a disadvantage because the typical self-employed or 1099 employee will write off as much expense as possible from their gross income on their tax returns to minimize how much they owe once tax season comes around. Borrowers still must qualify based on the income deposited over a given period, typically verified on 12 or 24 months of bank statements. The total deposits in the bank statement period are the gross income used. Once this number is established, an expense factor is applied depending on the business industry. The debt to income ratio or DTI is then derived (based on the income against the new mortgage payment and current monthly minimum debt obligations i.e. credit card, car loan, student loans, etc.) to ensure the borrower can afford the additional mortgage loan payment. If all aspects of the borrower’s finances are within the program guideline requirements and a DTI no higher than 50-55%, the lender will be able to underwrite and finance the loan. These loans are packaged and sold on the secondary market just the same as traditional mortgage loans.

2) Qualifying

This is an incredible and expanding area of mortgages that levels the playing field for self-employed and 1099 employee borrowers, providing the opportunity to qualify without tax returns. These types of loan programs can be used for both owner-occupied, and non-owner-occupied 1-4 unit properties, the same as traditional financing allows.

Bank Statement Loan Program Highlights:

  • 12-24 month Bank Statement Loans available
  • Up to 90% LTV (on Purchases & R/T Refinances)
  • Must have 2 years verifiable self-employment income (must own at least 50% of the business)
  • No Tax Returns
  • Maximum loan amount $7.5M
  • Purchase, Rate and Term or Cash Out Refinance
  • 4 years seasoning for foreclosure, short sale, bankruptcy, or deed-in-lieu
  • Owner-occupied, 2nd homes and non-owner occupied

What you would need for submission:

  • 12-24 Months Bank Statements (business or personal)
  • Copy of Business License (2 years)
  • CPA Letter (stating you are 100% owner; you have been in business for 2 years and they have done your taxes for two years | Also list your current expense ratio and the CPA License Number)

For those that do not qualify for the 12-24 Months Bank Statement Loans, we have additional stated income programs to choose from.

True Stated Income Loan Program

What is a True Stated Income Loan?

The new age 2023 “True Stated Income” loan is different from the early 2000s. In the past, a borrower could just state their income with no verification process of any kind, using lower credit scores, higher LTV’s. In addition the previous loans were option ARMs with balloon payments on a short term making them much higher risk loans.

The True Stated loans available for borrowers today require higher credit scores, lower LTV’s and proof of asset reserves, and are now 30 year fixed programs.

True Stated loans do not require your tax returns, the lender uses an alternative way of verifying your 6-12 month asset reserves using 1 month bank statement, that’s it. You can use either your personal and/or business bank statement.

TRUE Stated Income Loan Program Highlights:

  • Owner Occupied and 2nd Home Only
  • 1 month Bank Statement
  • Up to 80% LTV on Purchases & R/T Refinances (700+ FICO for 20% Down)
  • Up to 70% Cash-Out
  • Maximum Loan Amount $3M
  • No Tax Returns
  • No Employment
  • No Income
  • Credit worthiness is based on LTV, credit score and current liquidity

P&L Loan Program

What is a P&L Loan?

A P&L loan is beneficial and a beautiful solution for self-employed business owners. Often self-employed business owners run into problems when applying for a home loan due to their lack of consistent patterns in their income stream shown on their bank statements and/or high DTI (debt-to-income) ratio. This is because business owners have a unique US tax code that allows them to offset amounts of taxable income with deductions, thereby reducing their income tax burden.

What is a Profit and loss statement?

A profit and loss statement is a financial document that shows how your revenue relates to your costs and expenses, which is used to often provide an accurate assessment of the borrowers true income. This tool is used to evaluate profit and determine the revenues and expenses. This statement is the tool that lenders will use to qualify business owners for a mortgage loan.

P&L Loan Program Highlights:

  • Primary Residence, 2nd Home, Investment
  • Maximum Loan Amount $7.5M
  • Eligible Property types: SFR, 2-4 Units, Condo (FNMA Warrantable), Non-Warrantable Condo, Condotel
  • Ineligible Property Types: Agricultural, Mixed-use, Co-op, Rural
  • FICO 660+
  • Up to 80% LTV (purchase and rate and term refinance)
  • Up to 80% LTV (cash-out)
  • Cash out may be used for reserves
  • P&L must be prepared by (CTEC, CPA, or EA)

1099 Income Loan Programs

A 1099 income loan program is beneficial and another amazing solution for self-employed 1099 workers, including gig workers, contractors, freelancers, and self-employed borrowers. Individuals that file W-9s run into issues qualifying for conventional mortgage loans. 1099 loan programs allow these individuals to use their 1099 earning statements to qualify for a mortgage loan instead of using tax documents or bank statements.

1099 Income Loan Program Highlights:

  • Owner-Occupied, 2nd Homes, and Investment
  • Maximum Loan Amount $7.5M
  • Up to 80% LTV
  • Credit scores starting at 640
  • No tax returns required
  • Most recent one or two years 1099 plus year to date earning statement allowed
  • Borrower must be self-employed working for the same employer for two years
  • Two years seasoning for foreclosure, short sale, bankruptcy, or deed-in-lieu
  • Non-warrantable condos allowed


If you would like to discuss more details on qualifications and requirements, we are available to answer any questions you may have.

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Valor Lending Group
CA DRE #02026238 | NMLS #1600345

Petco Park | Diamond View Tower
350 10th Ave / 10th Floor
San Diego, CA 92101
[email protected]
Office: (619) 344-2640
Fax: (619) 872-2400

Arizona Branch

Valor Lending Group, Inc.
Branch ID# 2245288 | MB-1030262

Eagle Ridge
1548 Hawkeye Ridge Ave
Prescott, AZ 86301
[email protected]
Office: (619) 344-2640
Fax: (619) 872-2400

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