Can a Self-Employed Contractor Get a Bank Statement Mortgage?

The Quick Read: Yes, a self-employed contractor can usually get a bank statement mortgage, because the loan is reviewed around documented income from your deposits instead of the net profit on your traditional personal-income documentation, subject to lender guidelines. The loan is fully underwritten. It simply reads your cash flow in place of your tax return.

• Qualifying income comes from 12 months of business or personal bank statements, averaged and then reduced by a lender-set expense factor.
• On a primary residence, select lenders in Lendmire’s network go up to 90% LTV on a purchase or rate-and-term refinance.
• Loan sizes typically run from $125,000 to $3,500,000, with reserves commonly around 6 months of the housing payment.
• Occupancy matters most. This loan fits your own home or second home best, while a pure rental often fits a DSCR loan better.
• Clean deposits, steady months, and a documented expense picture do more for your file than anything else.

What Is a Bank Statement Mortgage?

A bank statement mortgage is a non-QM loan. Non-QM means the loan sits outside the standard rules that conventional lenders use to measure income. Instead of traditional personal-income documentation, the lender studies your bank deposits to see what the business actually collects.

Here is how that differs in practice. A conventional lender asks for two years of returns and starts from the bottom line. A bank statement lender starts from the money that landed in your account.

Across the wholesale network Lendmire works with, the product is built for people whose taxable income understates their real earnings. Contractors are the textbook case. Experian describes borrowers supplying personal or business statements for the previous one to two years. In the programs Lendmire places files with, 12 months is the working standard, though the exact window follows each lender’s program sheet.

Why Contractors Fit This Loan So Well

Contractors fit because their write-offs shrink taxable income far below the cash the business moves. Trucks, tools, materials, subcontractor payments, and equipment all reduce the net line on a return.

Picture a framing subcontractor who grosses steady money but reports a thin profit after depreciation and deductions. On paper, a conventional lender sees a small income. In the bank account, the lender sees a working business with consistent monthly deposits.

Tax treatment can depend on how the funds are used and how the property is held; borrowers should keep clear records and speak with a qualified tax professional before relying on any deduction.

The loan also helps contractors with lumpy years. A conventional lender averages your returns across two years, and one slow year drags the number down.

How Does a Lender Turn Deposits Into Income?

A lender screens your deposits, averages them, applies an expense factor to business deposits, and compares what is left to your full monthly housing obligation. The steps are mechanical, and you can predict most of them before you apply.

1. Pick the account type. Statements come from a personal account, a business account, or both.

2. Screen the deposits. Underwriters remove transfers between your own accounts, loan proceeds, refunds, and one-time items.

3. Average the eligible deposits. The lender totals the clean deposits and divides by the number of months.

4. Apply the expense factor. This percentage stands in for operating costs. What remains is qualifying income.

5. Apply your ownership share. If you own less than 100% of the business, only your portion counts.

6. Test the full housing payment against that income. The test also includes your other monthly debts.

7. Review credit, assets, and reserves. Every file gets this review.

The lender sets the expense factor, and you do not pick it. A figure around half is commonly used to illustrate the idea, but it is an example, not a rule. Personal-account deposits are often credited more fully than business-account deposits. Some programs accept a lower factor when a CPA prepares a profit-and-loss statement or expense letter. That document is one of the strongest levers a contractor has.

A Worked Example

Say your eligible deposits average 100 units a month and the lender applies a 50% expense factor. Qualifying income is 50 units. If the factor drops to 40% because a CPA documented your real costs, qualifying income rises to 60 units. Same deposits, a 20% larger income number.

That is why the expense factor matters more than almost anything else on a contractor file. The dollars vary by borrower, so run your own deposits through the editable calculator on this page for an illustrative estimate.

Which Deposits Count and Which Do Not?

Business income counts. Money that only passes through your account, or that you already owned, does not. This is where many contractor files get cut down, so it pays to know the line.

Usually counted:

• Customer payments for completed work
• Progress draws and milestone payments from clients
• Regular payments from repeat general contractors, if you are a subcontractor
• Deposits that match invoices, contracts, or a clear business pattern

Usually screened out:

• Transfers between your own personal and business accounts
• Loan proceeds, lines of credit draws, and credit card payments received
• Refunds and returned deposits
• A one-time windfall, such as a property sale or an insurance payout
• Pass-through money you collect only to pay out again, which a lender may question

The pass-through item is the one contractors miss. If a homeowner pays you for materials and you hand most of it straight to a supplier, an underwriter may see that as money that was never yours. A clear paper trail helps, and so does a separate account for job-cost money.

Personal or Business Statements? Account Hygiene Decides

Both work, but mixed accounts make your file harder to read. An underwriter wants to see which money is the business and which is household spending. The cleaner the picture, the less room for a conservative reading.

The setups differ by how you work:

• A sole-proprietor subcontractor who gets paid into one personal account can often use personal statements. The lender may credit those deposits more fully, because the account holds income and living costs together.
• A general contractor who pays subs and buys materials usually has a business account with heavy outflow. Expect the expense factor to apply, and consider a CPA-backed expense ratio.
• An LLC owner with several accounts must disclose every business account. Leaving one out understates income. Including one full of internal transfers overstates it and invites questions.
• A partial owner is credited only for their ownership share.

If you plan to apply in a few months, start separating job-cost money from your own pay now. Do not make large, unexplained moves between accounts in the months before you apply. Each transfer is one more line an underwriter has to explain.

Is This a Loose Loan? What the Rules Say

No. It is a fully documented loan with different documents. The CFPB’s compliance guide for the ability-to-repay rule says income does not have to be full-time or salaried, but it must be verified with reasonably reliable third-party records. Bank statements are exactly that kind of record.

Nothing in federal rules bars contractors or sole proprietors. The practical limits come from lender and investor guidelines, which is why terms differ so much between lenders. Credit, assets, reserves, and the property all still get reviewed.

Does Occupancy Change Your Options?

Yes, and it should be the first question you answer. Occupancy decides which product fits and which disclosure rules apply.

Your own home or a second home. This is the strongest use of a bank statement loan. These are consumer mortgages, so the standard consumer disclosure process (TRID) applies. On a primary residence, select lenders in the network typically go up to 90% LTV on a purchase or rate-and-term refinance. LTV, or loan-to-value, is the loan amount as a share of the property’s value. Stronger files earn the top of that range.

A cash-out on your own home. The ceiling is lower. Cash-out on a primary residence typically goes up to 80% LTV with a fixed expense ratio, or 75% with an accountant-prepared ratio. On a second home, cash-out typically tops out at 75% LTV, by loan size and credit.

A rental you will not live in. Bank statement cash-out on an investment property tops out around 75% LTV. Leverage on an investment purchase using bank statements varies by lender, so treat it as a conversation, not a number.

Rentals are treated differently on the paperwork side too. A loan on a non-owner-occupied rental, including a short-term rental, is a business-purpose loan and exempt from TRID. The official Federal Reserve staff commentary on Regulation Z shows the analysis for rental property depends on factors like unit count, with a four-unit reference point. Business-purpose loans are reviewed differently from a standard owner-occupied mortgage, but that does not make them looser. Each file still goes through lender underwriting.

Which Path Fits Your Income?

Pick by occupancy first, then by how your deposits look. This table compares the main routes a contractor weighs.

DSCR stands for debt service coverage ratio. It compares a rental’s monthly rent to its full monthly obligation. A DSCR loan is reviewed primarily on property-level rental income covering the payment, subject to lender guidelines. Programs below 1.00 coverage are available through select lenders in the network, but LTV and terms adjust.

A contractor with rentals often ends up using both. The bank statement loan goes on the home you live in. DSCR goes on the pure rentals. The reason is simple: a bank statement loan runs through your personal income, so each new mortgage stacks against your own debt load. DSCR reviews each rental on its own rent, which helps when you are adding properties. Lendmire’s complete DSCR loans guide walks through that side in detail.

If you do not want to be limited to one document type, there is another route for some borrowers. Asset-depletion qualification uses liquid assets in place of income and runs to about 80% LTV on a primary residence. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.

What Documents Will You Need?

Expect a deposit-based file to be document-heavy in a different way. The usual checklist looks like this:

• 12 months of business or personal bank statements, every page
• Government ID and proof of business ownership
• Business license, contractor license, or similar proof you have been in the trade
• A CPA letter or profit-and-loss statement, if you want the lender to consider a lower expense factor
• Recent statements for savings, retirement, or investment accounts that support reserves
• A list of your debts and a credit report authorization
• Purchase contract or current mortgage statement, depending on the transaction

Time in the trade matters. If you spent years as a W-2 employee in construction before going out on your own, that history can help show business continuity. Lenders differ on how much self-employment history they want, so ask early.

When Is This Loan the Wrong Move?

It is the wrong move when another path does the job more cheaply or more cleanly. Here are the common cases.

• Your traditional personal-income documentation already shows strong income. If your reported net income supports the payment, a full-documentation loan may suit you better. Compare total cost, including points, fees, prepayment terms, reserves, and cash to close.
• Your deposits are falling. The average pulls qualifying income down, and a declining trend draws questions. A bank statement file works best with steady or growing months.
• The property is a pure rental. DSCR usually fits better and does not hinge on your personal deposits or lumpy months.
• Your accounts are tangled. If personal and business money mix freely, spend a few months cleaning up before applying.

Neither product is a shortcut. Both look at credit and reserves, and the better your file looks, the more options you will see.

How to Prepare Months Ahead

Preparation is a more affordable way to improve a deposit-based file. Start well before you plan to apply.

1. Open or designate a primary business account. Route customer payments there consistently.

2. Stop moving money around. Transfers, large cash deposits, and one-off payments all need explanations.

3. Pay down revolving balances. Lower debts help the payment test and your credit profile.

4. Talk to your CPA. Ask whether a profit-and-loss statement or expense letter could support a lower expense factor.

5. Collect proof of business. Gather license, insurance, and contract history.

6. Build reserves. Programs commonly look for around 6 months of the housing payment.

Seasonality needs a plan too. If winter is slow, your 12-month average already reflects it, so be ready to explain the pattern. A single huge month can help the average but may also raise questions, so keep contracts or invoices to back it up.

Why Contractors Get Declined (and What to Fix)

Most declines trace back to a short list of causes. Each one has a fix, and some take only a few months.

• Inconsistent or declining deposits. The fix is time and steadier invoicing before you apply.
• A high expense factor. The fix may be a CPA-prepared profit-and-loss statement to support a lower one.
• Unexplained transfers or large deposits. Keep a paper trail for anything that is not a customer payment.
• Thin reserves. Build cash and liquid assets first.
• A missing account. Disclose every business account, even the ones you rarely use.
• Credit issues. Pay down balances and fix errors before the lender pulls your file.

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. Contractors usually find the real decision is not whether they qualify but which documentation path shows their income most accurately, and that choice is worth making before the first application goes in.

About Lendmire

Lendmire (NMLS# 2371349) is a mortgage brokerage serving self-employed and high-net-worth borrowers in 16 states. Bank statement, P&L-only, 1099-only and asset-based mortgages are arranged through wholesale lending channels; Lendmire brokers the financing and the lender underwrites each application. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.

References

1. Experian — What Is a Bank Statement Loan?

2. CFPB — ATR/QM Small Entity Compliance Guide

3. Federal Reserve — Official Staff Commentary on Regulation Z