How bank statement loans work: 2025 guide for America's 10 million self-employed borrowers
Briefly

Self-employed individuals often underreport income due to deductions and variable revenue, leading to inaccuracies in evaluating repayment ability. Bank Statement Loans offer a solution by assessing actual deposits instead. As of 2024, nearly 43% of the U.S. workforce was engaged as independent workers, indicating a growing need for adaptable mortgage options. Eligibility for such loans requires two years of self-employment history and detailed bank statements. Qualifying income is derived from monthly deposit averages, adjusted by a specified expense factor to accurately reflect financial standing.
Tax returns often understate self-employed income due to legal deductions and fluctuating revenue, which can misrepresent a borrower's ability to repay loans.
Bank Statement Loans provide lenders with a clearer view of sustainable earnings by measuring real deposits, helping accommodate the expanding independent workforce.
By May 2025, approximately 10 million workers were classified as unincorporated self-employed, returning to pre-pandemic levels and increasing borrowers' need for income-flexible mortgage options.
Qualifying income for borrowers with bank statements is adjusted based on eligible deposits and an expense factor, which varies by business type and other factors.
Read at www.housingwire.com
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