I’m Travis Buis, a loan officer with Elite Home Lending in Myrtle Beach. A bank statement loan in South Carolina exists for people whose tax returns don’t show what they really earn. On the Grand Strand, that describes a lot of very solid borrowers.

What is a bank statement loan?

It’s a mortgage that measures your income from the deposits into your bank account. A standard loan reads the net income on your tax returns instead.

Here’s the bind it solves. Good tax planning lowers the income a standard loan sees. So the better your accountant is, the weaker you can look on a normal application. This program closes that gap.

Who uses a bank statement loan on the Grand Strand?

Seasonal and self-employed earners, which is most of this economy. Think restaurant and bar owners, contractors and trades, charter captains, landscapers, salon owners and short-term rental operators.

If your year is built around the tourist season and you write off every expense you legitimately can, this loan was designed with you in mind. There’s more on how seasonal income gets read in self-employed and seasonal income.

How do you qualify for a bank statement loan?

How many months of statements?

Usually 12 to 24 months, depending on the program. You can often use personal accounts, business accounts, or both.

Business accounts usually get an expense factor. That’s a percentage the lender assumes goes to running the business, because not every dollar deposited is income to you. Sometimes a CPA letter showing your real expense ratio helps.

What else does the lender look at?

Proof that the business is real and stable, such as a business license or a CPA letter, and usually a couple of years in business. Your credit and your down payment matter too.

What does a clean deposit history look like?

Regular deposits that match the business you say you run. Large, irregular deposits aren’t a deal-breaker, but each one gets questioned, so be ready to explain where it came from.

Transfers between your own accounts are the usual reason a file looks messier than the business really is. Keeping them to a minimum in the months before you apply makes underwriting smoother. It helps to know what underwriting really looks for.

What are the trade-offs?

Two main ones, and I’d rather you hear them from me.

• The rate is usually higher than a standard loan, because the lender takes on more uncertainty about income.
• The down payment is usually larger than a standard loan asks for.

For many self-employed buyers, that trade is still worth it. It can mean buying now instead of waiting years for tax returns that tell the full story. On the other hand, if your returns already show enough income, a standard loan will usually cost you less. I’ll tell you which one fits.

Pull two or three recent statements and get pre-qualified. I can usually tell you in one conversation whether this is your route.

Bank statement loan FAQ

How does a bank statement loan work?

The lender reviews your deposits over a set period, usually 12 to 24 months, and uses them to calculate your income instead of your tax returns.

Who is a bank statement loan for?

Self-employed and seasonal earners whose tax returns understate what they really make, which describes a lot of Grand Strand business owners.

Is a bank statement loan hard to get?

Not if your deposits are steady and you can explain the large ones. The biggest slowdown is usually gathering statements, so start early.

Does a bank statement loan cost more?

Usually. Expect a higher rate and a larger down payment than a standard loan. If your tax returns already show enough income, a standard loan is often cheaper.