/GUIDE
If your CPA did their job, your tax return understates you. This is the documentation type built for that.
A self-employed borrower’s tax return shows net income after every legitimate deduction. Conventional underwriting reads that number as your income. The deductions that saved you at tax time are the same ones that shrink what you appear to be able to afford.
Bank-statement underwriting works from a different document set. Nobody asks you to amend a return or change how you file.
They review a stretch of bank statements (commonly personal or business, sometimes both), and identify deposits that represent business revenue. Transfers between your own accounts, loan proceeds, and one-off non-revenue deposits get excluded, because counting them would inflate the picture.
From gross business deposits, an expense factor is applied to approximate what the business actually costs to run, leaving a figure treated as your income. How that factor is determined varies: some lenders use a standard assumption by industry, some will use a CPA’s letter or a prepared profit and loss statement instead.
This matters more than people expect. If business revenue lands in a business account and you pay yourself from it, the personal-account picture may be cleaner and simpler to document. If everything runs through one account, expect more questions about which deposits are what.
The practical advice: keep the accounts separate, and keep them clean, well before you plan to buy anything.
Deposits aren’t the only path. A borrower with clean 1099 income can often be documented from the 1099s directly. A business with a CPA-prepared profit and loss statement can sometimes be documented from that. Which fits depends on how your business actually keeps records.
This is not stated income and it is not a 2008-era product. Income is fully documented (real deposits, real statements, real preparer letters), and verified through a licensed lender. Ability-to-repay rules apply the same as on any consumer mortgage. The difference is which documents establish the income, not whether it gets established.
See who it’s for, how it works, and the common questions.
/programs/bank-statementTell me the property and the plan and I’ll come back with what’s eligible. Eligibility and terms vary by scenario.
Send a scenarioEducational only. Not an offer, an approval, or advice on your specific file.
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