If you are self-employed in Boca Raton or anywhere in Palm Beach County, you already know the pattern. The business makes money, the deposits are steady, and the tax return does not show enough income to support the mortgage you want. A bank statement loan is one way to close that gap. It is not a shortcut around underwriting, and it is not the right answer for every borrower, but for the right file it can mean buying this year instead of waiting two more.

Why your tax return and your cash flow tell different stories

Loans that follow agency guidelines, including conventional loans sold to Fannie Mae or Freddie Mac, plus FHA and VA loans, calculate self-employed income from federal tax returns and supporting business records. Fannie Mae treats anyone with a 25% or greater ownership interest in a business as self-employed and generally requires a two year history. The qualifying number is not gross receipts. It comes from business income after expenses, adjusted for items like depreciation, and then divided down to a monthly figure.

That is where the mismatch starts. Every legitimate write-off, whether it is equipment, mileage, a home office, or a depreciation deduction, reduces taxable income. Lower taxable income is useful in April. It is a problem at mortgage time, because income-based underwriting uses the lower number. A business owner with strong deposits and aggressive but perfectly legal deductions can look poor on paper and profitable in the bank.

If your returns already support the loan amount you need, start there. An agency loan or a jumbo loan usually costs less than a non-QM program. If they do not, you have alternatives, and a bank statement loan is one of them.

What a bank statement loan actually is

A bank statement loan is a non-QM mortgage. Instead of calculating income from tax returns, the lender reviews 12 or 24 months of bank statements, identifies eligible deposits, and converts them into qualifying income using its own formula. These loans are not sold to Fannie Mae or Freddie Mac, and they are not FHA or VA loans. Each lender publishes its own guidelines covering how deposits are counted, which expense factor applies, minimum credit scores, maximum loan to value, and reserves. Bank statement programs sit inside the wider group of non-QM mortgage options, which also includes approaches such as asset depletion for borrowers whose strength is in savings rather than income.

The name does not mean the loan is unsupervised. For consumer purpose mortgages, federal law requires the lender to make a reasonable, good faith determination that you are able to repay, and the lender documents income, debts, assets, and the property. A bank statement loan changes which document proves your income. It does not remove credit, asset, appraisal, or property review.

Loan size is one practical advantage. The 2026 conforming loan limit for a one unit property in Palm Beach County is $832,750, according to FHFA, and loan amounts above that are jumbo. Non-QM programs are not bound by the conforming limit, so they can finance amounts above it, depending on the lender and the program.

How lenders turn deposits into qualifying income

Business statements. The most common approach. The lender totals eligible deposits over the statement period, averages them monthly, then applies an expense factor to account for the cost of running the business. A 50% expense factor is a common program default, and some lenders apply a higher factor to industries that typically run thinner margins. If your real expenses are lower than the default, many lenders will accept a letter from your CPA, tax preparer, or bookkeeping service stating your actual expense ratio, which can raise qualifying income substantially.

Here is the math. Average monthly business deposits of $40,000 at a 50% expense factor produce $20,000 a month of qualifying income. The same deposits with documentation supporting a 35% expense ratio produce $26,000 a month. Same money, same statements, a very different loan amount.

Personal statements. Some programs use personal bank statements instead of business statements, typically with a much smaller deduction from deposits, and usually with a requirement that the deposits can be traced to your business or another recurring source. If you pay yourself by moving money from the business account to your personal account, expect to provide both sides.

What gets excluded. Transfers between your own accounts, loan proceeds, tax refunds, one time windfalls, and large deposits with no paper trail. Lenders also care about behavior over time. A steady or growing deposit pattern supports the file. A declining trend invites questions, and returned items or overdrafts need an explanation.

12 months or 24 months of statements?

Both options exist, and the choice changes your numbers. A 24 month program shows two full business cycles, and lenders often reward that with better pricing or a higher loan to value. A 12 month program can be the better path when your business grew recently, or when you started within the past two years and want your strongest months counted instead of being averaged against older, lower ones. Ask for both calculations before you commit to a program, because the answer is not always obvious.

What else the underwriter reviews

Credit history. Minimum scores differ by program. Publicly posted non-QM program summaries we reviewed in October 2026 commonly list minimum credit scores around 640, with better pricing and higher loan to value options at higher scores. A larger down payment can offset a lower score on some programs.
Loan to value. Many bank statement programs top out around 80% for a primary residence, with less financing available for lower scores, a 12 month statement option, or an investment property. A few programs stretch higher with strong credit.
Reserves. Cash left over after closing, usually measured in months of the new housing payment. Bigger loan amounts generally require more reserves.
Self-employment history. Two years is the norm. Some programs accept 12 months when you were working in the same industry before going out on your own.
The property. Appraisal, condition, insurance, and Florida specific details can decide the file. Roof age can raise insurability questions early, and a flood zone can change your closing costs. Reviewing both before you make an offer saves time later.

What a bank statement loan costs

Bank statement programs are non-QM loans, and non-QM pricing generally carries a higher rate and higher fees than agency loans. Some programs offer interest only payments, which lowers the monthly payment but does not build equity. Ask for a Loan Estimate so you can compare the payment, the annual percentage rate, and the total cost of credit, and ask what the same loan would cost if you could qualify on tax returns. That comparison is the honest way to decide whether the tradeoff is worth it.

On consumer purpose mortgages, federal rules tightly restrict prepayment penalties. A penalty is permitted only in narrow circumstances, is capped at 2% of the prepaid balance during the first two years and 1% during the third year, and cannot run past three years. Investment property loans made for business purposes are not covered by those same rules, which is one reason prepayment penalties come up more often in investor lending than on a primary residence.

When a bank statement loan is not the best tool

If your tax returns support the income you need, an agency or jumbo loan usually costs less.
If the subject property is a rental, a DSCR loan may fit better because it focuses on the rent rather than your personal income.
If you have significant assets and modest taxable income, an asset depletion approach may work better.
If your business had one unusually strong year, ask whether a profit and loss statement program or waiting for the next filed return gets you better terms.
If you are comparing several ways to document business income, it helps to see them side by side before choosing.

What to gather before you apply

12 or 24 months of statements for every business and personal account you want counted, including all pages
Year to date profit and loss statement
Two years of personal and business tax returns, since most bank statement lenders still collect them
A letter from your CPA, tax preparer, or bookkeeper if you want a lower expense factor applied
Business license and entity documents, plus a way to confirm the business is active
Asset statements for the down payment, closing costs, and reserves
Purchase contract or refinance details, and the current mortgage statement if refinancing

The more of this you assemble up front, the fewer rounds of conditions later. Small documentation gaps are the most common reason a self-employed file slows down.

How MJS Financial works with self-employed Florida borrowers

Bank statement guidelines are set lender by lender, and the differences decide deals. Two lenders can analyze the same 24 months of statements and reach different qualifying income, different maximum loan to value, or different reserve requirements. One wholesaler’s current grid may be stricter than the last one you saw. Working with a Florida mortgage broker who can run your file through several non-QM lenders answers those questions instead of guessing. MJS Financial is a Boca Raton mortgage brokerage serving borrowers across Palm Beach County and Florida, and you can reach the office at 561-212-0002.

Before you pick a program, it helps to know your alternatives. You can review current mortgage rates, run a payment on the mortgage calculator, and when you are ready, start a pre-approval so we can compare the bank statement route against everything else available to you.

Frequently asked questions

Do I need 12 or 24 months of bank statements?

Both options exist with most lenders. The 24 month option shows two full cycles and often unlocks better terms. The 12 month option is useful when your business grew recently or started within the past two years, because it counts your strongest recent months instead of averaging in older ones. Ask for both calculations.

Can I use personal bank statements instead of business statements?

Some lenders allow it, usually with a much smaller deduction from deposits than a business statement program applies, and usually with a requirement that the deposits can be tied to your business income. If you transfer money from your business account to your personal account, plan on providing both sets of statements.

What credit score do I need for a bank statement loan?

It varies by lender and program. Minimum credit scores in the 600s are common, and higher scores typically open up higher loan to value options and better pricing. On some programs a larger down payment helps offset a lower score.

Is a bank statement loan the same as a stated income or no doc loan?

No. You still document income, debts, and assets, the property is appraised, and the lender must still determine that you can repay the loan. The difference is which document provides the income evidence.

Are bank statement loan rates higher than a regular mortgage?

Generally yes. Bank statement loans are non-QM, and non-QM pricing is typically higher than agency pricing. Ask for a current quote and a Loan Estimate so you can compare your options side by side instead of assuming a specific spread.

Can I refinance into a conventional loan later?

Many borrowers do once their tax returns show enough income, subject to credit, income, property, and program requirements at that time. Timing and eligibility are not guaranteed, and seasoning requirements may apply.

Sources

Bank statement program terms vary by lender and change over time. The program details described above, including expense factor defaults and credit score ranges, reflect publicly posted non-QM lender guidelines reviewed in October 2026. They are examples of how these programs are structured, not MJS Financial requirements or approval standards. Guidelines are confirmed at the time of application.