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What is a personal bank statement loan?
A personal bank statement loan is an alternative-documentation mortgage that uses the borrower's personal bank statements to help document qualifying income instead of tax returns. Underwriters review deposits over a set period and count the ones that represent income, excluding transfers, loan proceeds and other non-income deposits.
It fits self-employed borrowers who pay themselves from the business into a personal account, and other borrowers with income that's hard to show on a W-2. Because personal deposits are typically owner draws or distributions, the business expense adjustment used on business statements generally isn't applied the same way.
Not every deposit is income. Underwriters look for a consistent pattern, may ask about large or unusual deposits before counting them, and may ask for documentation that business and personal accounts are separate.
