1st Advantage Mortgage is a licensed mortgage broker and lender in Charlotte, NC. Self-employed borrowers can compare specialist wholesale lenders for bank statement programs, including deposit-calculation methods, pricing, and reserve requirements.
Self-Employed Bank Statement Loans
A bank statement loan qualifies you on deposits, not tax returns. The lender reviews 12 or 24 months of business or personal bank statements, calculates a monthly income from the deposits, and uses that number to approve the loan. Self-employed buyers in Charlotte who take legitimate write-offs and cannot qualify on their tax returns are the most common bank statement borrowers.
What to expect: 12 or 24 months of statements, a down payment that typically starts around 10% and is more often 15% to 20%, credit scores that typically start in the 620 to 660 range depending on the program, and reserves after closing. Available for purchase and refinance, primary residence, second home and investment property.
Bank statement lending in Charlotte
Charlotte has one of the fastest-growing populations of self-employed professionals and small-business owners in the Southeast. Legitimate write-offs are exactly what a good accountant is for, and they are also what stops a conventional underwriter approving the loan. A bank statement program reads the deposits instead, across Mecklenburg, Gaston, Union, Cabarrus, Iredell and York counties.
Bank statement loans are one of several routes for a self-employed borrower. Our self-employed mortgage guide compares them with 1099-only, asset depletion and DSCR programs.
How the deposit calculation works
The lender adds up the deposits over 12 or 24 months and applies an expense factor, and the result is the monthly income the file is underwritten on. The expense factor is where programs differ most: some use a flat percentage, some accept a lower one with a CPA letter or a profit and loss statement, and a few will use your actual business expenses if you document them. On the same set of statements, two lenders can arrive at qualifying incomes that are thousands of dollars apart, which is the reason to compare them rather than take the first answer.
Twenty-four months usually prices better than twelve, because it shows a longer track record and smooths out a strong or weak quarter. Twelve months is the better choice when the business has grown recently and the older year would drag the average down.
Which deposits count, and which do not
Business revenue counts. Transfers between your own accounts do not, and neither do one-off items that are not income: a loan advance, the sale of a vehicle, a tax refund, a gift. Underwriters look for a pattern, so large irregular deposits are usually questioned and often excluded unless you can show what they were.
Two practical things make the file easier. Keep business and personal banking separate, because a commingled account forces the underwriter to strip out personal deposits line by line. And avoid moving money between accounts in the months before you apply, since every transfer is a deposit the lender then has to back out.
What else the file needs
- Twelve or 24 months of statements, all pages, including the blank ones
- A year-to-date profit and loss statement on most programs
- Your business license, or a CPA or tax preparer letter confirming self-employment and how long it has run
- Reserves after closing, counted in months of the full payment
- A larger down payment than a conventional loan, typically starting around 10% and more often 15% to 20%
Most non-QM programs start around 620, and pricing improves as scores rise. Programs vary by lender.
Bank statement loans around Charlotte
Charlotte has one of the fastest-growing populations of self-employed professionals and small business owners in the Southeast, and this is the program most of them buy on when their returns do not tell the whole story. It works on a primary residence, a second home or an investment property, and on a purchase or a refinance. If a conventional loan will do the job on two years of returns we will tell you, because it is usually cheaper.