Bank Statement Income Calculator
Lenders turn bank statements into income with one formula: qualifying income = eligible deposits × (1 − expense factor) × ownership share ÷ months. They total 12 or 24 months of deposits, remove transfers and other non-income deposits, apply the investor’s expense factor to business accounts, and average the result into a monthly figure.
Written by Tanner Cook, NMLS #2090424 · Updated
How the estimate works: qualifying income = eligible deposits × (1 − expense factor) × ownership share ÷ months.
The 12-month option averages your latest year. The 24-month option averages two years, so it needs the deposits for the year before too.
Add up the deposits on those statements, leaving out transfers between your own accounts, loan proceeds, refunds and other deposits that aren't income.
Investors set this. Business statements often use a fixed factor (commonly 50%) or a lower ratio supported by a letter from your CPA or tax preparer.
Business income is usually counted in proportion to your share. Investors also set a minimum share you must own.
Gross monthly W-2 pay for a co-borrower, if you have one. It is added after the deposit math.
Your estimate
Estimated qualifying monthly income
— / mo
Enter your eligible deposits to see an estimate.
Monthly qualifying income only. This tool doesn't estimate a loan amount, a payment or a rate.
Estimate for illustration only. This calculator is for educational purposes and is not a loan approval, pre-qualification, or commitment to lend. Actual qualifying income depends on the investor's guidelines and a full review of your statements. Non-QM loan programs require alternative income documentation. All loans are subject to underwriting approval, income and asset verification, property appraisal, and an ability-to-repay determination. Not all applicants will qualify. Program availability and guidelines are subject to change without notice. Cornerstone First Mortgage, LLC NMLS #173855.
How do lenders calculate income from bank statements?
Every bank statement program follows the same five steps. The investor sets the expense factor, the minimum ownership share and which deposits it excludes, which is why the same statements can produce different figures with different investors.
Total the deposits
The underwriter adds up the deposits on 12 or 24 consecutive months of personal or business bank statements.
Remove what isn’t income
Transfers between your own accounts, loan proceeds, tax refunds, gifts, one-time asset sales, reversed or charged-back deposits and large deposits you can’t document come out.
Apply the expense factor
On business statements the investor treats part of the deposits as business costs: often a fixed factor (commonly 50%) or a lower ratio supported by a letter from your CPA or tax preparer. Personal statements generally have none.
Apply your ownership share
If you own part of the business, the income is counted in proportion to your share. Investors also set a minimum share you must own to use business statements.
Average it by month
The total is divided by 12 or 24. The result is your monthly qualifying income, the figure the lender uses in its ability-to-repay review.
See the full list of deposits underwriters leave out on our bank statement loans page.
Example: 12 vs. 24 months of business bank statements
Hypothetical example. Assumes business statements, 100% ownership and a 50% expense factor.
Eligible deposits over the last 12 months total $300,000. On the 12-month option: $300,000 × (1 − 0.50) × 100% ÷ 12 = $12,500 a month of qualifying income.
The 12 months before that held $240,000 of eligible deposits, so the 24-month total is $540,000. On the 24-month option: $540,000 × (1 − 0.50) × 100% ÷ 24 = $11,250 a month.
Because income grew in the latest year, the 12-month option gives the higher figure here. When the latest year dipped, the 24-month average can be the stronger choice. If the same owner held a 50% share of the business, each figure would be halved: $6,250 and $5,625 a month.
What this calculator doesn't do: it estimates qualifying income only. It doesn't estimate a loan amount, a payment or a rate, and it can't tell you whether you'll be approved. That takes a review of your statements, credit and assets against the investor's guidelines.
How lenders figure self-employed income
How do lenders calculate income from bank statements?
Lenders calculate bank statement income with one formula: qualifying income = eligible deposits × (1 − expense factor) × ownership share ÷ months. They total 12 or 24 months of deposits, take out transfers, loan proceeds and other non-income deposits, apply the investor’s expense factor to business accounts, and divide by the number of months.
What is an expense factor on a bank statement loan?
An expense factor is the share of business deposits a bank statement loan treats as business costs rather than income. Investors set it: business statements often use a fixed factor (commonly 50%) or a lower ratio supported by a letter from your CPA or tax preparer, and personal statements generally use no expense factor.
Should I use 12 or 24 months of bank statements?
Choose the bank statement period that best reflects steady income. A 12-month period counts only your most recent year, which helps when income has grown. A 24-month period averages two years, which can help when the latest year dipped. Investors set which periods they offer.
How does my ownership share affect bank statement income?
On business bank statements, lenders usually count qualifying income in proportion to your ownership share, so a 50% owner is credited with half of the income from the account. Investors also set a minimum share you must own to use business statements and verify it with a CPA letter, operating agreement or articles of incorporation. Guidelines vary by investor.
Which deposits don’t count as income on a bank statement loan?
Bank statement loans leave out deposits that aren’t business income: transfers between your own accounts, loan proceeds, tax refunds, gifts, one-time asset sales, reversed or charged-back deposits, and large deposits you can’t document. Payments from card processors and payment apps usually count when they are for your goods or services.
Do lenders use gross or net income for self-employed borrowers?
It depends on the loan. Conventional loans start from the net income on your tax returns, using Fannie Mae’s cash flow analysis (Form 1084 or an equivalent), and add back some non-cash deductions such as depreciation. Bank statement loans start from gross deposits instead, and most 1099-only programs start from your gross 1099 earnings and subtract a fixed expense factor (commonly 10%); some investors use a different factor.
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Our quick qualifier takes about two minutes and points you to the program most likely to match how you earn: bank statements, 1099s, a P&L, or assets.
Tanner & Zac Cook NMLS #2090424 / #2111496Cornerstone First Mortgage, LLC NMLS #1738554.89 · 45 reviews of Tanner Cook on Experience.comTanner Cook, NMLS #2090424 | Zac Cook, NMLS #2111496
Cornerstone First Mortgage, LLC, NMLS #173855