Can You Use Gross Deposits Before Expenses for a Bank Statement Loan?

The Quick Read: Partly. Gross deposits are where the income calculation starts, but they are rarely the number a lender reviews your file on, because non-income credits come out first and business accounts then take an expense factor. Which program you use decides how much is removed.

• Personal-account statements generally count eligible deposits at or near full value, after transfers, refunds and loan proceeds are stripped out.
• Business-account statements run eligible deposits through an expense factor, and only the remainder counts as income.
• The lender or program sets the factor. A lower one typically needs a profit-and-loss statement or an accountant’s letter to support it.
• Your ownership share caps what counts. A partial owner credits only their percentage of the post-factor income.
• Qualifying income then feeds your debt-to-income test, so personal debts matter on every purchase.

One note on the phrase. “Gross deposits” also shows up in payment processing and accounting, where it means card sales before fees or revenue before costs. This article uses it in the lending sense: total credits on your bank statements before any adjustment.

What Does “Gross Deposits” Mean on a Bank Statement Loan?

It means the total of every credit hitting the account during the statement window, before the lender sorts income from non-income. That raw total is the first line of the calculation, not the last.

Across Lendmire’s wholesale network, qualifying income comes from 12 months of business or personal bank statements, averaged, with lender-specific expense factors. Market coverage often describes 12 to 24 months of statements, and Scotsman Guide notes lenders want consistent monthly deposits. The network’s typical window is 12 months, subject to lender guidelines.

Why does this product exist at all? Tax write-offs lower the net income on a return. They do not lower the cash that moved through your account. A self-employed investor with heavy deductions can look thin on paper and strong in the bank. Deposit-based programs let the lender look at the cash flow instead.

How Does a Lender Turn Gross Deposits Into Qualifying Income?

Eight steps take you from raw deposits to a monthly income figure. The expense factor is the step borrowers most often misjudge.

1. Pick the account type. Personal statements generally count eligible deposits directly. Business statements receive an expense factor, which is the share of deposits assumed to go to operating costs.

2. Set the statement window. Typically 12 months in this network.

3. Collect complete statements. Every page, every month, no gaps.

4. Remove non-income deposits. Transfers between your own accounts, loan proceeds, refunds, gifts and one-time items come out. Refundable tenant security deposits are not income either. This step often cuts the gross figure more than borrowers expect.

5. Apply the expense factor (business accounts only). A fixed default applies unless better proof exists.

6. Adjust for ownership. Only your share of the business counts.

7. Average over the months reviewed. The result is monthly qualifying income.

8. Test it against debts. Your debt-to-income ratio is measured on that income.

The formula in plain terms: eligible average deposits, times one minus the expense factor, times your ownership percentage.

Here is a purely illustrative walk-through using round percentages, not any lender’s actual figures. Say a business account shows deposits that, after removing transfers and refunds, leave 90% as eligible. A 50% expense factor halves that. A 100% owner keeps all of it; a 40% owner keeps 40% of what remains. Same statements, very different income. That is why the factor matters more than the gross total.

Personal or Business Statements: Which Is Better?

Neither wins everywhere. Personal statements can sidestep the expense factor, while business statements tend to be cleaner to document. The right choice depends on where your revenue actually lands.

In this network, business statements require at least 25% ownership. Where a program allows it, transfers from your own business into a personal account may count at full value, which is why some borrowers qualify better on personal statements. Not every program offers both methods, so ask which ones a lender will review.

What if business revenue runs through a personal account, or both? Commingling makes the file harder to read. Underwriters will want to see which deposits are business revenue and which are personal, and a clean separation helps.

Which Deposits Count and Which Don’t?

Counted deposits are recurring, documentable revenue. Excluded deposits are anything that is not earned income. A third group needs explanation before a lender will decide.

Merchant processors deserve a special mention. Statements from card processors may show gross sales, fees, chargebacks and net deposits. If your bank account only receives net-settled deposits, the fees were already taken out, and the underwriter will look at which figure the program starts from. Keep processor reports on hand so the lender can reconcile sales to deposits and avoid treating fees as a second deduction.

Seasonal income is usually averaged across the full window, so summer peaks and winter troughs smooth out. Declining deposits are a different story. Investors commonly view a downward trend as an underwriting red flag, and in that case a DSCR loan may be an easier fit for a rental purchase.

Can You Lower the Expense Factor?

Sometimes. Programs set a default, and you can usually ask for a lower one only with proof. Without proof, the file falls back to the default.

Across the network, fixed ratios are commonly tied to business type: lighter for a service business with no employees, higher for businesses with staff or products. A business owner can often substitute an accountant-prepared ratio, or a profit-and-loss statement, which is capped at 80% in this network. Exact figures follow each lender’s program sheet, and no one can promise you a specific factor before the file is reviewed.

Practically, here is what to prepare:

• A profit-and-loss statement covering the statement window, or an expense statement from a third-party tax professional.
• Deposits that tie closely to the revenue on that profit-and-loss statement. Some programs test this; treat the tolerance as one program’s rule, not a standard.
• Business entity documents showing your ownership percentage.

Does a lower factor matter much? A great deal. Moving from a high default to a CPA-supported lower factor can swing qualifying income dramatically on identical deposits. Brokers in this lane see files where documentation, not deposits, made the difference.

What Does the Law Say About Verifying Deposits?

For owner-occupied loans, the lender must verify the income it relies on. Federal rules do not set an expense percentage, so the factor is a lender underwriting convention.

Under the Ability-to-Repay rule in Regulation Z, a creditor must verify income using reasonably reliable third-party records, and the eCFR text lists financial institution records among them. Bank statements fall in that category. That is why “bank statement loan” does not mean unverified income. The statements are the verification. Occupancy matters here: an owner-occupied file (primary residence or second home) is a consumer mortgage, so TRID disclosures apply. A loan on a non-owner-occupied rental, including a short-term rental, is business-purpose and exempt from TRID.

How Does the Income Feed Into Approval?

Qualifying income is tested against your debts using a debt-to-income ratio. Your monthly obligations, including the new housing payment, are compared with that income. Program-specific limits apply.

Because bank statement income is personal, it is reused on every purchase, and your existing debts count each time. Only when you add a property do the new obligations reduce your room. A DSCR loan works differently: it qualifies primarily on property-level rental income covering the payment, subject to lender guidelines, so each property stands alone.

Leverage differs by what you buy. On a primary residence, bank statement programs reach up to 90% LTV on a purchase or rate-term refinance through select lenders, with stronger files earning the top of the range. Owner-occupied cash-out on a primary residence runs up to 80% LTV with a fixed expense ratio, or 75% with an accountant-prepared ratio. A second-home cash-out tops out around 75% LTV. Investment-property cash-out tops out around 75% LTV, while investment purchase leverage on bank statement documentation varies by lender. Loan sizes run roughly $125,000 to $3,500,000, with reserves commonly around six months of the housing payment. All of this is subject to lender guidelines and credit review.

When Does DSCR Beat a Bank Statement Loan for a Rental?

DSCR wins when the rent comfortably covers the property’s payment or your deposits are messy. Bank statements win when your deposits are strong but the rent covers the payment only thinly.

For a self-employed investor buying rentals, both tools are worth comparing. Bank statement income underwrites the borrower. DSCR lenders review the property’s rental income. Investors scaling a portfolio often prefer DSCR because personal debts stop stacking up against a single income figure. For a deeper comparison, see Lendmire’s complete DSCR loans guide. If your question is whether gross or net deposits drive the number, Lendmire’s piece Does a Bank Statement Loan Use Gross or Net Deposits as Income? goes into the distinction in more depth.

Some DSCR programs below 1.00 coverage are available through select lenders in the network, but leverage and terms adjust. Eligibility depends on the investor profile, the property and current lender guidelines.

Mistakes That Shrink Your Qualifying Income

Most shortfalls trace to the same few errors:

• Counting transfers between your own accounts as revenue.
• Submitting statements with missing pages or months.
• Assuming you can pick your own expense factor.
• Claiming a lower ratio with no profit-and-loss statement or CPA letter.
• Letting business and personal money mix without a paper trail.
• Ignoring that a partial ownership stake caps what counts.

Documents to Gather Before You Apply

• Complete bank statements for the full window, every page.
• A profit-and-loss statement or accountant letter, if you plan to support a lower factor.
• Proof of business ownership and your percentage.
• Processor or platform reports that reconcile sales to deposits.
• Written explanations for large or unusual deposits.

Get the expense-factor rules and proof requirements in writing before you plan a purchase. The site’s illustrative calculator can give a rough sense of scale, but it is only an estimate.

Key Terms Defined

Gross deposits: the total credits on your statements before any exclusions or expense factor.

Expense factor: the share of business deposits a lender assumes goes to operating costs.

Eligible deposits: the credits left after transfers, refunds, loan proceeds and one-time items are removed.

Debt-to-income ratio: your monthly obligations divided by qualifying monthly income.

Ownership percentage: your share of the business, which limits how much of its income counts.

If you are self-employed and want to see how the numbers work, Lendmire can help you compare bank statement loan options based on your deposits, the property, credit profile, leverage, and your goals. Lendmire is a broker arranging financing through select lenders in its wholesale network, and any loan is subject to lender guidelines and is not a commitment to lend. Tax treatment varies; consult a qualified professional.

About Lendmire

Lendmire — NMLS# 2371349 — is a mortgage broker that arranges bank statement, P&L-only, 1099-only and asset-based home financing in 16 states through wholesale lenders, on primary residences, second homes and investment properties. Every option is subject to the lender’s guidelines and full underwriting. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.

References

1. Scotsman Guide: Don’t Shut the Door on Quality Borrowers

2. CFPB Regulation Z § 1026.43

3. eCFR 12 CFR 1026.43