Quick Answer
To qualify for a bank statement loan in Houston you generally need 12 or 24 months of bank statements, a 620 credit score, 10 to 20 percent down, and 6 to 12 months of reserves. The lender uses your deposits minus an expense factor as your income. Tax returns are not required.
A bank statement loan lets self-employed Houston borrowers qualify on the money that actually lands in their accounts instead of the reduced income on a tax return. The requirements are straightforward once you see them side by side. This page walks through each one so you know exactly what to gather before you apply.
Requirements at a Glance
Bank statements: 12 or 24 months, personal or business
Credit score: 620 minimum on most programs
Down payment: 10% to 20% for a primary residence
Reserves: 6 to 12 months of payments after closing
Time self-employed: 2 years typical
Tax returns: Not required
Months of Bank Statements: 12 vs 24
Every bank statement loan runs on either 12 or 24 months of statements from your personal or business accounts. The choice changes how your income reads to underwriting.
A 24-month program averages two full years of deposits. It smooths out seasonal swings and shows a longer track record, which usually earns the strongest terms and the lower end of the down payment range. A 12-month program looks only at your most recent year. It fits newer businesses and borrowers whose income grew recently, because older, lower months do not drag down the average.
You do not have to guess which one fits. Brandon runs your deposits through both a 12-month and a 24-month scenario and shows you which window qualifies you for more. If your most recent year is your strongest, 12 months can win. If two years read clean and steady, 24 months often lands better terms.
| Statement Period | Best For | Typical Down Payment |
|---|---|---|
| 12 months | Newer businesses, recent income growth, lighter document load | Higher end of the 10-20% range |
| 24 months | Established businesses with steady or seasonal deposits | Lower end of the 10-20% range |
Credit Score Requirement
Most bank statement loan programs start at a 620 credit score. Some lenders accept a lower score when you bring a larger down payment, usually 20 percent or more. A higher score improves the terms you are offered and can reduce the down payment a lender asks for.
If your score sits below 620, you still have paths. Other non-QM programs, a co-borrower, or a few months of credit repair can move you into range. Brandon reviews your full credit picture during pre-approval and tells you the fastest route to the score that unlocks the program you want.
Down Payment Requirement
Bank statement loans generally require 10 to 20 percent down for a primary residence. Investment properties usually call for 20 to 25 percent. Where you land inside that range depends on your credit score, your loan amount, and how many months of statements you provide. Stronger credit and a 24-month history typically move you toward the lower end.
First-time buyers can use gift funds from family toward the down payment on most programs. If you are combining a gift with your own funds, plan the paper trail early so the deposit is easy to document at underwriting.
Reserve Requirement
Reserves are the mortgage payments you keep in the bank after closing. Most bank statement programs require 6 to 12 months of payments in reserve, which reassures the lender that you can carry the loan through a slow business month. Reserves can sit in checking, savings, or eligible retirement and brokerage accounts.
Larger loan amounts and lower credit scores usually push the reserve requirement toward the higher end. Build this cushion before you apply. Waiting until underwriting to scramble for reserves is one of the most common reasons a bank statement file stalls.
Who Is Eligible
Bank statement loans are built for borrowers whose tax returns understate what they actually earn. If you run a business and deposit income into an account, you are likely a candidate. The most common eligible borrowers include:
Most lenders want to see at least two years of self-employment. If you recently moved from a W-2 job into your own business, ask before you assume you do not qualify. Some programs count prior experience in the same field toward the two-year mark.
Documentation Needed
A clean, complete file closes faster. Gather these before your first call so nothing slows the process:
- 12 or 24 months of personal or business bank statements, all pages
- Business license or other proof of self-employment
- CPA or licensed tax preparer letter, on programs that require one
- Government-issued ID
- Homeowners insurance information for the property
- Explanations for any large or unusual deposits
Some programs require a short CPA letter confirming your self-employment status and business type. It does not state your income amount. Others accept a business license paired with a business bank statement instead. Requesting the CPA letter early is one of the simplest ways to avoid a delay late in underwriting.
How Income Is Calculated
The core requirement behind every bank statement loan is your deposit history. The lender adds up your deposits over the statement period, applies an expense factor, then divides by the number of months. Business accounts usually use a 50 percent expense factor because gross deposits include costs you later pay out. Personal accounts count closer to 100 percent because the money is already yours.
Worked Example (24-Month Business Account)
Total deposits over 24 months: $672,000
Expense factor applied: 50%
Income after factor: $336,000
Divided by 24 months: $14,000
Qualifying monthly income: $14,000 ($168,000 per year)
Compare that $168,000 to the net income a heavily written-off Schedule C might show. The deposit method reflects what your business actually produces. Run your own numbers with the bank statement income calculator, then have Brandon confirm the exact figure.
Brandon serves Houston's self-employed community in both English and Vietnamese, so nothing about which statements to pull or how income is calculated gets lost in translation.
See If You Meet the Requirements
Frequently Asked Questions
How many months of bank statements do I need to qualify?
Bank statement loans require either 12 or 24 months of personal or business statements. The 24-month option averages two full years of deposits and usually earns the strongest terms and a lower down payment. The 12-month option fits newer businesses and borrowers whose income grew recently. Brandon runs both to see which qualifies you for more.
What credit score do I need for a bank statement loan?
Most bank statement loan programs start at a 620 credit score. Some lenders accept a lower score with a larger down payment, typically 20 percent or more. A higher score improves the terms you are offered and can lower your down payment. If your score is below 620, other non-QM or full-documentation programs may still work.
How much down payment is required?
Bank statement loans generally require 10 to 20 percent down for a primary residence and 20 to 25 percent for an investment property. Stronger credit and a 24-month statement history usually unlock the lower end of the range. First-time buyers can use gift funds from family toward the down payment on most programs.
How many months of reserves do I need?
Most bank statement programs require 6 to 12 months of mortgage payments held in reserve after closing. Reserves can sit in checking, savings, or eligible retirement and brokerage accounts. Larger loan amounts and lower credit scores usually call for more reserves. Plan for this before you apply so it does not slow your file at underwriting.
Who is eligible for a bank statement loan?
Self-employed business owners, 1099 independent contractors, freelancers, gig workers, and commission earners with at least two years of self-employment qualify. The program is built for borrowers whose tax returns understate their real income because of legitimate write-offs. If you deposit income into a bank account and can document your self-employment, there is usually a program that fits.
How is income calculated on a bank statement loan?
The lender adds up your deposits over 12 or 24 months, applies an expense factor, then divides by the number of months. Business accounts usually use a 50 percent expense factor and personal accounts count closer to 100 percent. The result is your qualifying monthly income. Tax returns, W-2s, and pay stubs are not used.
Do I need a CPA letter to qualify?
Some programs require a short CPA or licensed tax preparer letter confirming your self-employment status and business type, while others do not. The letter does not state your income amount. Some lenders accept a business license plus a business bank statement instead. Getting this document early prevents delays late in underwriting.
Related Resources
- Bank Statement Loans Houston - How the core program works
- Self-Employed Mortgage Houston - Every program for business owners and 1099 earners
- Best Bank Statement Loan Programs - Compare all five program types
- Bank Statement Income Calculator - Estimate your qualifying monthly income
- All Non-QM Options - Compare every alternative mortgage product
- All Loan Programs - The full Houston program directory
Check the Requirements Against Your Profile
Send me your last 12 to 24 months of statements. I will confirm which requirements you already meet, calculate your qualifying income, and tell you the exact program that fits. Bilingual English and Vietnamese. No obligation.
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