Bank statement loans · California
A bank statement loan will not count all of your deposits. Plan on about half.
Every page selling a bank statement loan says “qualify with your bank statements.” None of them mentions the expense factor, and the expense factor is what decides the file.
Reviewed 13 September 2026 · Wexmoor Circle LLC, Los Angeles
1 · The mechanism
A bank statement loan reads money that arrived, not income you declared.
The lender adds up deposits across 12 or 24 months, removes anything that is not revenue, applies an expense factor, and divides by the number of months. Then that figure becomes your income for the file.
So it exists for one person: someone whose tax return is legally accurate and commercially useless. A contractor who writes off a truck, a shop, and half a house is telling the truth to the tax authority and telling a conventional underwriter that they earn very little.
Importantly, nothing here rests on trust. The statements are real, the transfers get traced, and a deposit that cannot be explained is removed rather than argued about.
And this is the part that surprises people. Notably, the number the lender ends up using is not the number at the bottom of your statements. It is usually about half of it, and the next section is why.
$120,000
2 · The number nobody publishes
So the bank statement loan expense factor is the lender’s guess at what your business costs to run.
A common default is 50%. So the lender treats half of what landed in the account as cost, and the other half becomes your income, whatever your actual margins are.
Because it is a default rather than a measurement, it can move. A letter from a CPA stating your real expense ratio is the usual route, and on a genuinely low-overhead business a lender may accept a lower figure — which raises your qualifying income without a single extra dollar being deposited.
So the same statements can produce very different answers at two lenders. Still, that is not a pricing difference. It is an underwriting one, and the lender settles it before you order or pay for anything.
So ask what factor a lender will apply before you do anything else. It moves the qualifying number more than the rate does, and almost nobody asks.
3 · The window
Twelve months or twenty-four, and the shorter one is not always kinder.
Choose the window that shows the business honestly. Generally a good last year averages better over twelve. Conversely a steady business with one bad quarter averages better over twenty-four.
| 12 months | 24 months | |
|---|---|---|
| Suits | A business that grew recently | A steady business, or one with a soft patch to average out |
| Paperwork | Lighter | Heavier, and every month gets read |
| Price | Usually higher — less history to judge | Usually lower |
| Watch for | One strong quarter flattering the average | An old bad stretch dragging it down |
After all, rate depends on the file, and a page that prints a number is printing it for somebody else’s file.
4 · The file
What a bank statement loan file actually contains.
Six things, and the first two decide most of it.
Every page of every statement
First, twelve or twenty-four months of statements, all pages, including the blank ones. A missing page stops underwriting until it arrives.
An explanation for the odd deposits
Namely transfers between your own accounts, a loan, a gift, a refund. Anything that is not revenue comes out of the total, so label it before someone else guesses.
Proof the business exists
A licence, an entity filing, or a CPA letter. Two years of self-employment is the common expectation. If the business and the banking sit outside the US, that is a foreign national loan instead.
Down payment and reserves
Larger than a documented loan asks for, and reserves held after closing rather than spent on it.
Credit
A gate and a price input. It will not rescue a thin deposit history, and nothing else rescues one either.
The property
Non-owner-occupied and business purpose for the loans we work on. A home you intend to live in is a different product under different rules.
5 · The trade
A bank statement loan charges you for the income you did not declare.
Everything below is the honest cost of this route. None of it is a reason to avoid it — only a reason to count it.
It is priced above a documented loan
More work to underwrite and more risk to carry. If your tax return can support the loan, it will do so more cheaply.
Half your revenue disappears on the way in
The expense factor is the largest single cost in this product, and it is invisible until someone runs your statements.
Your deposits become the story
Meanwhile the underwriter reads irregular months, cash-heavy stretches and large one-off transfers. Tidy banking in the year before you borrow is worth real money.
If the property pays for itself, you may not need this at all
A DSCR loan ignores your income entirely. When the rent clears the payment, that is usually the simpler and cheaper route.
Primary sources worth reading yourself: CFPB 12 CFR 1026.43, Ability to Repay · 12 CFR 1026.3(a), the business-purpose exemption · California DFPI
6 · The questions
What we are asked most, answered short.
Each answer stands on its own. Take the one you came for.
How does a bank statement loan work?
The lender totals your deposits over 12 or 24 months, strips out anything that is not revenue, applies an expense factor, and divides by the months. That monthly figure is your income for the file.
How much of my deposits will count?
Plan on about half. A 50% expense factor is a common default, and a CPA letter showing lower real expenses is the usual way to improve it.
Personal or business accounts?
Lenders use both, and they treat them differently. Business accounts usually carry the expense factor; personal accounts are often read closer to face value if the deposits are clearly owner draws.
Do transfers between my own accounts count?
No, and leaving them unlabelled is the most common way a good file looks worse than it is. Mark them before anyone else has to guess.
How long must I have been self-employed?
Two years is the usual expectation. Shorter histories are occasionally looked at, and they are priced for it.
Is this the same as stated income?
No. Stated income asked you to declare a figure. This reads money that actually arrived, and verifies every line of it.
What are the rates?
We do not print them, because a rate on a page is a rate for somebody else’s file. Send yours and you get a real answer instead of a range.
Can you tell me if it works before I spend anything?
Yes, and that is the point of reading it first. Send the statements and you get the arithmetic back, including when the answer is no.
7 · Next
Check the property before the bank statement loan. It may carry the loan on its own.
If the rent clears the payment, your income stops being the question and the file gets simpler and cheaper.
Wexmoor Circle LLC · 930 Colorado Blvd, Suite 1, Los Angeles, CA 90041 · Reviewed 13 September 2026
