How to Qualify for a Bank Statement Loan in Michigan

The Quick Read: To qualify, a self-employed borrower documents twelve months of business or personal bank statements, the lender averages the eligible deposits into monthly income after removing transfers and applying an expense factor, and the borrower must still clear credit, debt-to-income, reserves, and property review under the applicable program. Here is what matters most:

• Income comes from deposit averages, not tax-return net income, so heavy write-offs matter less.
• Business accounts take an expense factor, while personal accounts usually count closer to full value.
• Owner-occupied purchase and rate-term files reach up to 90% LTV on a primary residence through select lenders.
• Owner-occupied cash-out tops out at 80% LTV, and investment-property cash-out at about 75%.
• Loan sizes run roughly $125,000 to $3,500,000, with reserves commonly around 6 months of the housing payment, subject to lender guidelines.

Borrowers searching for Michigan help will find that the mechanics do not change at the state line. Program availability is a separate question, and Lendmire’s consumer mortgage licensing covers 16 states, so confirm your state before building a plan around any specific file.

What Is a Bank Statement Loan, Really?

A bank statement loan is a non-QM mortgage that measures your income by what lands in your accounts rather than what your tax return shows after deductions. It exists for owners whose write-offs shrink taxable income far below their real cash flow.

It is not a no-paperwork loan. It is a fully documented loan with different paper. The file still carries credit, assets, debt, and a property review. Lendmire is a broker, so it arranges these loans through select lenders in its wholesale network, and each lender underwrites and approves its own files.

Because these programs sit outside agency boxes, each lender writes its own standards. Scotsman Guide notes that details vary by lender, with a typical scenario using 12 to 24 months of statements and consistent deposits across personal, business, or combined accounts. Across Lendmire’s network, twelve months is the common starting point. Some programs ask for more.

How Does Underwriting Treat Your Statements, Step by Step?

Underwriting runs in a fixed sequence: choose the accounts, total the deposits, strip out non-income credits, apply an expense factor if the account is a business account, average over the months, then test the borrower personally.

1. Pick the account type. Personal, business, or a mix. The choice changes how much of each deposit counts.

2. Total the deposits. The underwriter adds up deposits for the full statement window, not a favorable stretch.

3. Remove what is not income. Transfers between your own accounts, loan proceeds, gifts, and refunds come out.

4. Apply the expense factor. Business deposits are reduced to reflect the cost of running the company.

5. Divide by the months. The result is monthly qualifying income.

6. Run the borrower’s file. Credit, debts, the new housing payment, reserves, and the property are reviewed.

Step four is where borrowers get surprised. Scotsman Guide offers a 50% factor as an example and notes that a lender could instead rely on a profit-and-loss statement or an expense statement prepared by a third-party tax professional. Treat 50% as an illustration. Across the network, the factor depends on the lender, the business type, and what you can document.

Underwriting on these files is also largely manual. A person reads your statements, which is why clean, consistent accounts help more than clever structuring. Scotsman Guide describes non-QM underwriting as mostly manual, reviewing ability to repay, assets, down payment, and income.

What Does the Income Math Look Like?

The math is a ratio exercise. Take eligible deposits, multiply by the share the lender counts, and divide by the number of months. No dollar figures are needed to see the logic.

Run the logic on two borrowers with identical gross deposits. The first deposits everything into a business account where a 50% expense factor applies, so half of eligible deposits becomes income. The second runs the same revenue through a personal account that a lender counts at or near full value. The second borrower can qualify for a noticeably larger loan on paper, even though the underlying business is the same. Neither is wrong. They are different documentation paths with different outcomes.

A second pattern: a contractor’s deposits flow in and flow straight back out to crews and suppliers. A single expense factor can understate the usable income, and pass-through deposits may be excluded. In that case an accountant-prepared expense ratio may fit better than the default. The honest takeaway is to test both paths before applying.

Which Deposits Count and Which Get Removed?

Recurring customer or client payments count. Money that only moved around or that you will owe back does not.

Deposits that typically come out:

• Transfers between your own accounts
• Loan proceeds and credit-line draws
• Gifts and one-time windfalls
• Refunds and reimbursements

Items that draw questions and can reduce qualifying income:

• Large or unusual deposits without a paper trail
• Declining deposit trends across the window
• Big revenue swings from month to month
• Overdrafts or returned items
• Commingled personal and business funds

Seasonal businesses are not disqualified by lumpy months. Averaging smooths the swings, but a sharp downward slope in the later months can pull the average and the underwriter’s confidence down together. If a large deposit is legitimate, a short written explanation with the supporting contract or invoice usually serves the file better than silence.

What Documents Does the File Need?

Expect statements plus proof that the business is real and stable. Most lenders in the network want the full set of consecutive statements with every page, and many want at least two years of self-employment history, though exceptions exist.

Self-employed borrowers are generally defined as owners of 25% or more of a business, 1099 contractors, or Schedule C filers. Ownership share matters, because a minority owner may have to document the share of deposits that actually belongs to them.

How Much Leverage, What Loan Size, and What Reserves?

Leverage depends on occupancy and transaction type. The table shows the figures from Lendmire’s network, each tied to its scenario, and all are subject to lender guidelines and credit approval.

Loan sizes run roughly $125,000 to $3,500,000. Reserves commonly sit around six months of the housing payment. Credit score minimums and exact reserve rules vary by lender and by file.

Term length follows each lender’s program sheet. Do not assume a bank statement loan offers interest-only or extended-term options, because those structures are more common on the rental-income side.

What Structures and Alternatives Exist?

Bank statements are one alternative-documentation lane among several, and the right one depends on how your income shows up on paper.

• Bank statements (personal or business). Best when deposits are strong and traditional personal-income documentation understates income.
• CPA-prepared profit-and-loss. Useful when statements are complicated or the borrower runs multiple business lines.
• 1099 programs. Built for contractors whose 1099s tell the income story cleanly.
• Asset depletion. Qualifies from liquid assets rather than deposits.
• Rental-income programs. For investment property, where qualification primarily rests on property-level rental income covering the payment, subject to lender guidelines.

For investors, the split is sharp. A bank statement loan underwrites you, so every personal debt and the new payment count against deposit-based income. A rental-income program reviews the property’s rental income instead. Lendmire’s piece DSCR Loan Vs Bank Statement Loan For Investors covers that decision in detail, and some investors use one path for their home and the other for rentals. The complete DSCR loans guide explains the rental-based side.

Where Does the General Rule Break?

The standard path assumes clean deposits, a stable business, and room in your debt-to-income ratio. Several situations bend it.

Missing proof reverts to the default. If you cannot document a lower expense ratio, the lender’s default factor stands. That can cost real qualifying income. A CPA-prepared ratio or P&L is the usual remedy.

Pass-through and K-1 income. Owners who leave profit inside an entity face a different question: what counts as their income.

Thin DTI room. Strong deposits do not rescue a file with heavy personal debt. The borrower is still tested personally, so paying down debt before applying can matter more than adding deposits.

Commingled accounts. When personal spending runs through a business account, underwriters struggle to separate income from living expense. Separating accounts well before applying helps.

Lumpy or declining revenue. Averaging handles seasonality, but a clear downward trend invites a lower income figure or a request for a P&L.

Cost and leverage tradeoffs. These loans often cost more than conventional financing, so if your traditional personal-income documentation supports the income you need, run that route first. The flip point comes when write-offs push taxable income below the amount needed to qualify. At that point the extra cost buys access, not just convenience.

Does Occupancy Change the Rules?

Yes, occupancy decides how the loan is documented and disclosed. An owner-occupied file, such as a primary residence or second home, is a consumer mortgage, and consumer disclosure rules apply. A bank statement loan on a non-owner-occupied rental, including a short-term rental, is business-purpose and exempt from those consumer disclosure requirements.

The federal ability-to-repay rule helps explain why the process looks the way it does. The CFPB’s compliance guide says lenders must make a reasonable, good-faith determination of repayment ability, and that lenders may set their own underwriting standards as long as they consider and verify the required factors. The Federal Register notice lists those factors, including income or assets, employment status, debts, debt-to-income, and credit history. Bank statement loans sit outside the qualified mortgage box, and that is why guidelines vary so widely from one lender to the next.

Pricing and payment details change with the borrower, the property, and the program, so they are not covered here.

How Should You Prepare Before Applying?

Preparation is mostly about making your statements boring. Underwriters reward consistency.

• Several months out: separate personal and business spending, stop moving money between accounts without reason, and avoid new credit.
• A few months out: keep deposits steady and run business income through the business account.
• Before submitting: gather every page of every statement, your licenses, and an accountant letter if you may need a custom expense ratio.
• Throughout: keep overdrafts at zero and document any large deposit as it happens.

Key Terms Defined

Expense factor: The share of business deposits an underwriter subtracts to account for operating costs before counting income.

Eligible deposit: A deposit from real business or personal earnings, not a transfer, loan, gift, or refund.

Non-QM: A mortgage that falls outside standard qualified-mortgage boxes and follows lender-specific program guidelines.

Asset depletion: A way to qualify from liquid assets instead of deposit history.

Reserves: Liquid funds left after closing, commonly measured in months of the housing payment.

Debt-to-income (DTI): The ratio of your monthly debts, including the new housing payment, to your qualifying income.

Next Step

Reach the team at 828-256-2183 or request a quote. Whether traditional personal-income documentation or bank statements tell your income story better is the first question worth answering, and everything else in the file follows from it.

About Lendmire

Lendmire (NMLS# 2371349) is a non-QM mortgage broker that arranges financing through select lenders in its wholesale network, with investor programs in 41 markets including Washington, D.C. A Scotsman Guide Top Mortgage Workplace in 2025 and 2026, Lendmire is not a direct lender, and every file is reviewed by the lender subject to its guidelines.

References

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

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

3. Scotsman Guide, Helping Borrowers Fit the Boxes

4. CFPB ATR/QM Small Entity Compliance Guide

5. Federal Register, Ability-to-Repay and Qualified Mortgage Standards