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Bank-statement refinance: qualify on deposits, not tax returns
Built for self-employed and 1099 borrowers. Qualify on 12 to 24 months of bank-statement deposits instead of tax returns, so your real cash flow counts. See how it works before you apply.
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The basics
What is a bank-statement refinance?
A bank-statement refinance is a loan for self-employed and 1099 borrowers that qualifies on the deposits flowing into your bank accounts rather than the income shown on your tax returns. Business owners write off expenses to lower their taxable income, which is smart for taxes but can make a conventional loan harder to get. A bank-statement program looks at 12 to 24 months of real deposits to build a true picture of your cash flow, then uses that to qualify you for a lower rate, a better term, or cash out of your equity.
Who it is for
Who should consider a bank-statement refinance?
If your tax returns understate what you actually earn, your deposits can tell the real story.
Business owners
Heavy write-offs that lower your taxable income should not block a fair refinance.
1099 and gig earners
Contractors, consultants, and commission earners who do not fit a W-2 box.
Variable-income pros
Seasonal or fluctuating income smoothed across a 12 to 24 month deposit history.
Documents
What do you need to apply?
A bank-statement refinance trades the tax-return paperwork for a clear deposit history. Here is the short list most programs ask for. Exact requirements vary by lender and are subject to eligibility.
Bank statements
12 to 24 months of personal or business statements that show your deposits. No tax returns, W-2s, or pay stubs needed.
Proof of self-employment
A business license, CPA letter, or operating agreement to confirm you have been self-employed, generally for about two years.
Identification and the property
Standard ID, your current mortgage statement, homeowners insurance, and details on the home being refinanced.
Reserves
Many programs want to see a few months of payment reserves. Larger loans may require more, set by the lender.
Trade-offs
Bank-statement refinance pros and cons
| Pros | Worth knowing |
|---|---|
| No tax returns or pay stubs | Rates are typically higher than a conventional loan |
| Counts your true cash flow | An expense factor reduces business-account deposits |
| Rate-and-term or cash-out available | Usually needs about two years self-employed |
| Higher qualifying income for many owners | Reserves are often required |
Keep reading
Related refinance reading
Questions
Bank-statement refinance FAQ
How many months of bank statements do I need?
Most bank statement refinances use 12 or 24 months of personal or business statements. The number you choose can affect your qualifying income and your rate. We help you pick the window that presents your cash flow best, subject to lender guidelines.
Do I need tax returns or pay stubs?
No. The whole point of a bank statement refinance is to qualify on your real deposits instead of tax returns, W-2s, or pay stubs. This is built for self-employed and 1099 borrowers whose write-offs shrink their reported income.
What is an expense factor?
When you use business bank statements, the lender applies an expense factor, a percentage assumed for business costs, before counting deposits as income. The factor can be a fixed figure or supported by a CPA letter or profit-and-loss statement. A lower expense factor means more qualifying income.
Can I get cash out?
Yes. Bank statement programs commonly allow both rate-and-term and cash-out refinances. The maximum loan-to-value is set by the lender and is subject to eligibility, so we map your equity to the right program.
How long do I need to be self-employed?
Lenders typically want to see a two-year track record of self-employment, though some programs allow less with compensating factors. Requirements vary by lender and are subject to eligibility.
Will my deductions hurt my approval?
Not the way they do on a conventional loan. Because qualification is based on deposits rather than your adjusted net income, aggressive write-offs do not automatically reduce what you can borrow.
Let your deposits do the talking
Start your bank-statement refinance online, or book a quick call. No credit pull to get your numbers.