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.
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