12 vs. 24 Month Bank Statement Declining Trend Rules Explained

The Quick Read: When your deposits are falling, neither window hides the drop. The 12-month window shows only the recent, weaker stretch. The 24-month window blends in a stronger prior year, but lenders usually still weigh the recent months and may use the lower figure.

• Rising deposits usually favor the 12-month window.
• Flat or seasonal deposits usually favor the 24-month window.
• Falling deposits get a trend review under either window.
• The decline test is set by each lender’s program, not by a universal rule.
• Bank statement income only matters if you qualify personally. A DSCR loan does not use it.

The Honest Answer

The 12-month window is for borrowers whose income is climbing or whose business is newer. The 24-month window is for borrowers with steady or seasonal income who want a longer average. Neither is a shelter for a declining business.

Across the wholesale network Lendmire places files with, the standard documentation is 12 months of business or personal statements. Qualifying income comes from deposit averages after lender-specific expense factors. Some programs in the wider market also offer a 24-month option. Which one produces a better number depends on the shape of your deposits, not on which one sounds safer.

First, Make Sure This Is the Right Loan

Bank statement loans and DSCR loans are different tools. A bank statement loan is reviewed for you, the borrower, on documented income under the applicable program, subject to lender guidelines. A DSCR loan is reviewed primarily on property-level rental income covering the payment, subject to lender guidelines. Scotsman Guide draws the same line. It describes bank statement programs as averaging 12 to 24 months of deposits, and DSCR loans as qualifying on property cash flow instead.

So the decline rules here apply only when your personal income is the qualifying basis. Think of a self-employed investor buying a primary residence, or pulling cash out of one. On a DSCR file, statements mostly show funds to close and reserves. There is no income trend to decline. Lendmire’s complete DSCR loans guide covers that path in full.

Side-by-Side

The 12-month column reflects the network parameters Lendmire works from. The 24-month column shows published industry norms, which vary by lender.

The leverage row needs context. Select lenders in the network go up to 90% LTV on a primary-residence purchase or rate-term refinance. Owner-occupied cash-out tops out around 80% LTV. Investment-property cash-out tops out around 75% LTV. Investment purchases on bank statement documentation vary by lender, so treat any number you hear for those as lender-specific.

How the Averaging Works When Deposits Fall

Underwriters screen deposits first. They strip out transfers between your own accounts and one-time windfalls. They look hard at large or irregular deposits. What remains is divided by the number of months in the window.

Business-account deposits then get an expense factor. This is a haircut for the cost of running the business. The factor is program-specific, and an accountant-prepared ratio can change it. Personal-account programs often apply a lighter haircut or none, depending on the program. Never assume a universal formula.

Then comes the trend check. Falling income is a red flag under either window. A reviewer who sees a decline may use the more recent, lower stretch, ask for a written explanation, or decline to count the income. Which of those happens is the lender’s call.

Two habits help you read this. First, underwriters look at direction as well as the average. A flat line at a middling number reads differently than a steep slide that lands on the same average. Second, the expense factor compounds a decline, because it applies to a shrinking base.

When the 12-Month Window Is the Better Fit

Choose 12 months when your recent year is your best year. Say deposits averaged 100 index points a month in year one and 175 in year two. The 12-month figure is 175. The 24-month blend is about 138. The shorter window credits the growth you earned.

It also fits a newer business. A borrower with fewer than 24 months of history may not have a longer record to submit. A 12-month program is built for that situation.

It fits a prior weak year as well, such as a one-time disruption you can explain. Cutting it out of the window removes it from the math.

The tradeoff is exposure. A 12-month window has nowhere to hide a soft last quarter. If your trend is falling, the shorter window shows the whole decline.

When the 24-Month Window Is the Better Fit

Choose 24 months when your deposits are lumpy but steady. A landscaper, a seasonal retailer, or a contractor with long billing cycles may have a 12-month stretch that happens to catch only the high season. That overstates income, and a careful underwriter knows it. A longer window reflects the full annual pattern.

It also helps when your last year was unusually weak and the year before was strong. If the dip is a clean one-time event that has already recovered, the longer average can lift the number. The condition matters, though. The recovery has to show in the recent statements.

The 24-month window does not rescue a steady slide. A reviewer reading the last six months will see the slope, and many programs fall back on the lower recent figure. A borrower who assumes the longer average will carry a decline is often surprised.

Window choice can also change depending on account type. Some programs default to 12 months for personal statements and 24 months for business statements. Whatever the default, ask the loan officer to run both calculations before you commit. The same logic applies to a bank statement HELOC, where the window you choose can change the result.

Four Decline Shapes and How Each Reads

These are illustrative index figures, not benchmarks. Year one averages 100 points a month in each case.

• Steady taper. Year two averages 70. The 12-month figure is 70 and the 24-month blend is 85. A lender will likely favor the lower number, because the slide is consistent and the direction is down.
• Cliff. Deposits hold at 100 for 18 months, then drop to 50 for the last six. The 24-month blend looks decent, about 88. The recent six months tell the real story, and many reviewers will anchor to them.
• One-time dip. A single weak quarter in the middle, with a full recovery since. The 24-month window usually helps here, because the dip is diluted and the recent months are strong.
• Recovering V. Deposits fell sharply, then climbed back. A written explanation plus clean recent statements may support a more balanced view. How much credit you get varies by program.

The pattern is consistent. The longer window helps when the decline is behind you. It does little when the decline is still happening.

Seasonal Dip or Real Decline?

The easiest self-test is the same-month comparison. Put this March next to last March, this April next to last April, and so on. If every month sits close to its prior-year twin, you have seasonality, and the 24-month view usually tells the story fairly.

If most months are lower than their twins, that is a structural decline. A longer window will not change that, and underwriters can see it just as easily as you can.

Before applying, compute rolling 3, 6, 12, and 24-month averages on your own statements. If the 3 and 6-month figures sit well below the 12 and 24-month figures, expect the lender to lean on the recent months. If the short averages are higher, the 12-month window is likely your friend.

What the Rules Do and Don’t Say

No federal rule sets a 12 or 24-month window or a decline threshold. Those come from program guidelines, which is why they vary. What federal rules do require is that lenders verify the income or assets they rely on using reasonably reliable third-party records, per the CFPB’s compliance guide. Bank statements serve as those records. The same Federal Register final rule treats an owner with 25% or greater ownership in a business as self-employed for underwriting.

Occupancy decides the paperwork regime. An owner-occupied bank statement file is a consumer mortgage, so TRID disclosure rules apply. A bank statement loan on a non-owner-occupied rental, including a short-term rental, is business-purpose and exempt from TRID. Consumer mortgage licensing for this lane covers 16 states, so availability depends on the property’s location.

Apply Now, Wait, or Switch Lanes

If your deposits have stabilized for several months, applying can make sense. A few clean months pull the recent average up and give the underwriter a better slope to read.

If you are still sliding, waiting is often the better move. Applying mid-decline invites the lowest figure.

If you are buying a rental, consider the property-level path instead. Because a DSCR loan is reviewed primarily on rental income covering the payment, your personal income trend is not the qualifying basis. Bank statement programs also stack every new mortgage against the same personal income, which limits how far you can scale. Qualification on either path remains subject to lender guidelines, credit, reserves, and property review.

A written explanation of the decline helps. A lost client, a finished project, or a documented one-time event reads well. An open-ended explanation with no recovery signal does not. Tax treatment can depend on how the funds are used and how the property is held; investors should keep clear records and speak with a qualified tax professional before relying on any deduction.

Key Terms Defined

Bank statement loan: A mortgage that qualifies a self-employed borrower on documented income taken from deposit history instead of tax-return net income.

Deposit averaging: Adding eligible deposits over the window and dividing by the number of months.

Expense factor: A percentage a lender subtracts from business deposits to estimate operating costs. It varies by program.

Declining trend: A pattern where recent deposits run below earlier ones, which can lead a lender to use a lower figure.

LTV: Loan-to-value, the loan amount as a percentage of the property’s value.

Non-owner-occupied: A property you do not live in, such as a rental.

The Verdict

Pick 12 months if your income is rising, your business is under two years old, or a weak earlier year would drag you down. Pick 24 months if your income is steady or seasonal, or if a past dip has clearly recovered. If your income is falling right now, neither window protects you, and the decision becomes whether to wait or to move to a property-level DSCR loan for rentals.

The cleanest approach is to calculate both before you talk to a loan officer. The window that gives the higher number is not always the one a lender will use.

About Lendmire

As a non-QM mortgage broker (NMLS# 2371349), Lendmire facilitates DSCR investor loans across 41 markets, including Washington, D.C. DSCR eligibility is generally reviewed around property-level rental income instead of personal income documentation, subject to lender guidelines, which can suit LLC-structured portfolios and self-employed borrowers who don’t fit conventional boxes. Lendmire is a two-time Scotsman Guide Top Mortgage Workplace (2025, 2026).

References

1. Scotsman Guide: Which groups are driving non-QM lending

2. CFPB ATR/QM small entity compliance guide

3. Federal Register: ATR/QM final rule