12 vs. 24 Month Bank Statements for a Sole Proprietor’s Business Account

The Quick Read: A sole proprietor with rising income and a clean business account usually does better with 12 months of statements, while someone with seasonal or uneven deposits may be better served by a 24-month average that smooths the swings, and the lender, not the borrower, sets the expense factor that shrinks business deposits.

• Across the wholesale network Lendmire works with, 12 months of business or personal statements is the typical documentation. Published industry norms describe 12 to 24 months, and some lenders ask for the longer window.
• Qualifying income comes from averaged deposits after the lender removes transfers and applies an expense factor. The borrower does not choose that factor.
• On an owner-occupied primary residence, select lenders go up to 90% LTV on a purchase or rate-term refinance. Owner-occupied cash-out tops out at 80% LTV.
• For a pure rental, a DSCR loan may fit better, because it qualifies primarily on property-level rental income covering the payment, subject to lender guidelines.

The Honest Answer: Who Each Window Is For

Twelve months is for the borrower whose business is growing. The most recent year reflects what you earn today, so the average is not dragged down by a slow stretch long ago. Twenty-four months is for the borrower whose income swings. Seasonal work, big project cycles, and one-off lumpy years all look steadier when two years are averaged.

Neither window is better in the abstract. The right choice depends on your income trend, where your revenue lands, and what the lender’s program allows. Many programs fix the window and give you no choice. A few will run both and use whichever fits the file.

Side-by-Side

The 12-month column reflects the typical documentation across Lendmire’s wholesale network. The 24-month column shows published industry norms, which vary by lender.

A sole proprietor has no separate legal entity, so the business account usually sits in your own name or a DBA name. Ownership is effectively 100%, so no partial-ownership haircut applies. If you later vest a business-purpose rental in an LLC, that can be available, subject to lender program eligibility.

When 12 Months Is the Better Fit

Twelve months wins when your recent deposits are your strongest. Picture a contractor who landed larger clients over the past year. Averaging in an older, slower year would pull the coverage figure below what the business earns today. The 12-month window avoids that.

It also fits when your business account is relatively new. A lender cannot average 24 months of deposits you do not have. Some programs still expect a longer self-employment history even when they use 12 months of statements, so confirm that before you apply.

The lighter paperwork is a real benefit too. Fewer statements mean fewer pages to export, fewer deposits to explain, and fewer chances for a missing page or an odd transfer to slow the review.

The tradeoff is exposure. Twelve months shows a recent dip directly. If your last few months were weak, the average reflects that. Lendmire’s piece 12 vs 24 Month Bank Statements When Income Declined covers that scenario.

Leverage is where 12-month files can shine for owner-occupants. Select lenders in the network go up to 90% LTV on a primary-residence purchase or rate-term refinance. Stronger files earn the top of that range, and the program is subject to lender guidelines and credit review. Loan sizes typically run from $125,000 to $3,500,000.

When 24 Months Is the Better Fit

Twenty-four months wins when one hot or cold stretch would distort the picture. Say you run a landscaping business with a strong summer and a thin winter. A single 12-month window might land awkwardly if it starts or ends in a slow season. Two years of averaging evens that out.

It also helps if your income peaked a year and a half ago and has since settled into a steady pattern. The longer window shows durability, which some underwriters value.

The cost is dilution. If your income has risen sharply, the older months pull the average below your current earnings. You also pull more statements, and each one gets reviewed. More pages means more deposits to explain.

Remember that the window is a program choice, not a legal requirement. Scotsman Guide’s non-QM overview describes self-employed borrowers supplying 12 to 24 months of personal or business statements. It also notes that guidelines vary by lender, so one may accept 12 months where another asks for 24. For a closer look at the two options, read Lendmire’s breakdown of the difference between 12-month and 24-month bank statements.

What Happens to Your Deposits

Lenders do not simply add up deposits. The usual process looks like this:

1. You provide consecutive statements, all pages, for the chosen window. 2. The lender removes transfers between your own accounts, loan proceeds, refunds, and one-off items. 3. The remaining deposits are averaged over 12 or 24 months. 4. On business accounts, the lender applies an expense factor, which reduces the average. 5. The result is your qualifying income, which then runs against your debts, credit, assets, and reserves.

The screening step has a basis. The CFPB’s ability-to-repay compliance guide says a lender relying on account inflows must confirm they are the consumer’s own income. That is why a transfer from your savings account does not count as revenue.

The expense factor is a lender setting, not a universal rule. Scotsman Guide uses 50% as an example of a standard factor, and that figure is an illustration only. A profit-and-loss statement or expense ratio from a third-party tax professional can replace a flat factor on some programs. On owner-occupied cash-out, select lenders use a fixed expense ratio, or a lower one when an accountant prepares it.

Your result sits between gross and net. Write-offs lower your reported income, but a deposit-based review is not the same as taxable income. 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.

Which Account Do You Send?

Send the account that holds your business revenue, and keep it clean. Business statements get the expense factor. Personal statements are sometimes treated closer to gross, but only for deposits that trace back to the business.

Three situations come up often with sole proprietors:

• A young business account. Some programs allow earlier personal statements to cover the gap, but treatment varies by lender. Ask before you assume.
• Mixed accounts. Commingling means personal and business money share one account. It makes screening harder and can lead to a stricter expense factor or a request for cleaner statements.
• Several accounts. If revenue lands in more than one account, every account needs to be accounted for. Transfers between them must not be counted twice.

Explain large or unusual deposits in writing before the underwriter asks. A short note with a supporting invoice or contract settles most questions.

Owner-Occupied or Rental? The Property Changes the Loan

Occupancy decides which type of loan you are looking at. A bank statement loan on a non-owner-occupied rental, including a short-term rental, is business-purpose. Business-purpose loans are generally exempt from the consumer ability-to-repay rule, as CFPB’s Regulation Z §1026.3 lays out in context.

Leverage also shifts. Owner-occupied cash-out on bank statement documentation reaches up to 80% LTV. Investment-property cash-out tops out around 75% LTV. Investment purchase leverage on bank statements varies by lender, and investor-focused leverage guidance belongs to the DSCR side. Qualifying from liquid assets instead runs to about 80% LTV on a primary residence.

Bank statement loans also count your personal debt. Each rental mortgage you add raises your debt load and can limit how far you scale. A DSCR loan sidesteps personal income review by looking at the property. If you are buying a pure rental, the complete DSCR loans guide explains how the property’s rent drives the file. Many sole proprietors use bank statements for the home they live in and DSCR for the rentals.

The Verdict

Choose 12 months if your income is rising, your business account is newer, or you want the lighter file. Choose 24 months if your deposits swing with the seasons or the economy and a smoothed average represents you better. If your lender or program fixes the window, the decision is made for you, and your job is to present the strongest, cleanest statements inside it.

Before you commit, run both averages on your own deposits. If the two numbers are close, take the lighter file. If they are far apart, the trend in your income is telling you which window to use.

Next Step

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. Owner-occupied bank statement lending covers 16 states, and every file is underwritten individually, subject to lender guidelines. This is not a commitment to lend. You can reach the team at 828-256-2183.

About Lendmire

Lendmire (NMLS# 2371349) is a DSCR-focused mortgage broker that helps arrange investor financing across 41 markets, including Washington, D.C., through wholesale and investor-lending channels. DSCR eligibility is generally reviewed by the lender around the property’s rental income rather than personal income documentation, subject to lender guidelines — which works for self-employed investors, LLC operators, and portfolios above four financed properties. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.

References

1. Scotsman Guide, Rev Up the Engine for Non-QM Lending

2. CFPB ATR/QM Small Entity Compliance Guide

3. CFPB Regulation Z §1026.3