How a Bank Statement Loan Works in Richmond Hill

The Quick Read: A bank statement loan turns 12 months of business or personal deposits into qualifying income, so a self-employed borrower can document earnings that traditional personal-income documentation understates. The lender averages eligible deposits, applies an expense factor on business accounts, and then tests the result against debt-to-income, credit, and reserves. “Richmond Hill” names three different places (Georgia, Queens, and Ontario); this article covers the US mechanics, and the Ontario market runs on different rules.

• Qualifying income comes from 12 months of statements, not from traditional personal-income documentation.
• Business accounts take an expense factor set by the lender. The borrower does not pick it.
• Transfers, refunds, loan proceeds, and one-time deposits get stripped out.
• Primary-residence purchase and rate-term leverage reaches up to 90% LTV on select programs, subject to lender guidelines.
• A rental purchase often fits a DSCR loan better, because that loan tests the property, not the borrower.

Self-employed buyers hit the same wall in every town. Write-offs shrink taxable income, and a conventional file reads the shrunken number. A bank statement file reads the cash that actually moved through the account.

What Is a Bank Statement Loan?

A bank statement loan is a non-QM mortgage that qualifies a borrower on documented deposits instead of tax-return income. It is reviewed on documented income under the applicable program, subject to lender guidelines. It still involves a full credit, asset, and debt review.

“Non-QM” means the loan falls outside the standard qualified-mortgage documentation rules. Scotsman Guide’s non-QM data article explains that any home loan that doesn’t comply with the qualified-mortgage rules is non-QM, and that non-QM loans still have to satisfy repayment-capacity requirements. Interest-only and limited or alternative documentation loans are examples. So this is not a “no documentation” product. The deposits are the documentation.

Across the wholesale network, most programs ask for 12 months of statements. Some lenders offer other lookback windows, and those follow individual program sheets.

Who Does It Fit, and Who Doesn’t?

It fits borrowers whose real cash flow is higher than their traditional personal-income documentation shows. Typical profiles:

• Business owners who write off heavily.
• Freelancers and 1099 earners with steady deposits.
• Self-employed investors buying or refinancing a home they will live in.

It usually does not fit:

• Borrowers with falling deposits across the 12 months.
• Files where business and personal money are mixed so tightly that deposits can’t be sorted.
• Investors buying a pure rental. That is a property-level question, and a DSCR loan usually answers it more cleanly. More on that below.

How Does the Loan Work, Step by Step?

Underwriting follows a repeatable sequence. The details change by lender, but the order rarely does.

1. Pick the statement type. Personal accounts, business accounts, or both. Business accounts get an expense factor. Personal accounts often skip it, but the deposits must trace to the borrower’s work.

2. Prove ownership. Expect a business license, ownership documents, or a CPA letter that ties the borrower to the account and shows the ownership share.

3. Screen the deposits. The underwriter removes transfers between the borrower’s own accounts, loan proceeds, refunds, and one-time items. This tracks the logic in the federal consumer-finance regulator’s small-entity compliance guide, which says funds count as income only if the creditor relies on them.

4. Apply the expense factor. Business deposits include money that goes back out as operating costs. The lender discounts them. A CPA-prepared expense letter or profit-and-loss statement can sometimes replace a flat factor. Ask the lender first whether it is accepted and in what format.

5. Average the result. Eligible deposits divide across the months in the window to give monthly qualifying income.

6. Run debt-to-income. This is a borrower-income test. Credit, existing debts, and reserves all still count. Reserves commonly run around 6 months of the housing payment.

Loan sizes on select programs run roughly $125,000 to $3,500,000. Every file is underwritten individually.

How Do Lenders Turn Deposits Into Income?

The formula is simple: eligible deposits, divided by months, reduced by the expense factor, multiplied by the ownership share. Personal-account programs usually skip the reduction. The expense factor is set by the lender from the business type and the documentation, and no universal number applies.

Here is how the deposit screen usually sorts:

The CFPB’s rule text requires the lender to verify the income it relies on with reasonably reliable records, and bank statements are one such record. That is why the screening is strict. Underwriters read for trend as well as total. A strong average with a falling last quarter reads worse than a flat, steady line.

Where the General Rule Breaks

Several edge cases change the outcome.

• Multiple accounts. If business income lands in three accounts and the file shows one, the file understates income. Submit every account that carries it.
• Double-counting. Using personal and business statements together means the same dollars can’t count twice.
• Commingling. Mixed personal and business money makes deposits hard to classify. Expect more exclusions.
• Lumpy income. Seasonal deposits get averaged. A declining trend can hurt even when the average looks fine.
• Partial ownership. Income is scaled to the ownership share, so a 50% owner doesn’t get credit for 100% of deposits.

Which Occupancy Rules Apply to the Property?

Occupancy decides the paperwork regime. An owner-occupied file, meaning a primary residence or second home, is a consumer mortgage, and TRID disclosures apply. A bank statement loan on a non-owner-occupied rental, including a short-term rental, is business-purpose and exempt from TRID. Keep the two straight when planning the file.

Leverage differs too, and each figure belongs to its own transaction:

On owner-occupied cash-out, the 80% ceiling uses a fixed expense ratio, or 75% with an accountant-prepared ratio. Investment purchase leverage on bank statement documentation varies by lender. Strong files earn the top of each range, and weaker credit or larger loan sizes pull it down. All of it is subject to lender guidelines. This is not a commitment to lend.

Consumer mortgage availability for these files covers 16 states, so confirm the property’s state early.

Bank Statement or DSCR Loan on a Rental?

A bank statement loan is reviewed for the borrower. A DSCR loan is reviewed for the property, based on how the rent covers the monthly obligation. For a pure rental purchase, that difference decides the lane. Lendmire’s complete DSCR loans guide covers the property-based side in full.

A common pattern pairs the two: DSCR on the rentals, a bank statement loan on the investor’s own home. Investors with several financed properties can hit a debt-to-income wall on the borrower-income path, and that is where DSCR, which qualifies each property on its own rent, can fit better. A self-employed investor whose rental falls short on rent coverage can still use a bank statement loan if the deposits carry the debt-to-income test. Select lenders in the network also offer sub-1.00 DSCR programs, with LTV and terms adjusting. Lendmire’s piece What Qualifies You for a Bank Statement Loan on an Investment Property goes deeper on the borrower side.

What Should You Do Before Applying?

Clean statements make cleaner files. A few habits help:

• Keep business and personal money in separate accounts well before applying.
• Document every transfer between your own accounts.
• Write a short note for any large one-time deposit.
• Keep statements complete, with no missing pages or months.
• Ask your CPA early about an expense letter, and ask the lender whether it will accept one.

One more point on the income math. Larger deductions lower the income a conventional file would use. Bank statements show more of the cash, but the expense factor takes a haircut. Run both views before choosing a lane.

Richmond Hill Considerations

The name covers a city in Georgia, a neighborhood in Queens, and a city in Ontario. The mechanics above apply to US properties. Ontario follows a different mortgage framework, so Canadian readers need a Canadian lender. For the US locations, confirm the property’s state against the 16-state consumer footprint. Local income profiles, such as small business owners, tradespeople, and commuters with irregular pay, fit this product in any of them.

Key Terms Defined

Non-QM: a mortgage that falls outside qualified-mortgage documentation rules but still requires an ability-to-repay review.

Expense factor: the share of business deposits the lender treats as operating cost, set by the lender.

Lookback period: the number of months of statements the lender averages.

Debt-to-income (DTI): monthly debts divided by monthly qualifying income.

Reserves: liquid assets left after closing, commonly around 6 months of the housing payment.

Commingling: mixing personal and business money in one account.

Next Step

Program figures here are typical ranges from select wholesale-network lenders. They are not a commitment to lend. Tax treatment varies by situation, so consult a qualified professional.

About Lendmire

Lendmire is a non-QM mortgage brokerage (NMLS# 2371349) arranging DSCR investor loans in 41 markets, including Washington, D.C., through wholesale and investor-lending channels. DSCR loans are evaluated by the lender on rental income rather than personal income, subject to lender guidelines — a fit for LLC-owned portfolios, self-employed investors, and operators scaling beyond conventional loan caps. Recognized as a Scotsman Guide Top Mortgage Workplace in 2025 and 2026.

References

1. Scotsman Guide – Non-QM data article

2. CFPB – Ability-to-Repay/QM Small Entity Compliance Guide

3. CFPB – 12 CFR 1026.43