How do bank statement loans calculate qualifying income?

Bank statement qualifying income = average monthly deposits over the look-back period × (1 − expense factor).

At the 50% default: $60,000 average monthly deposits × 50% = $30,000/month qualifying income.

At a CPA-documented 35% expense ratio: $60,000 × 65% = $39,000/month — a $9,000/month increase in qualifying income on the same deposit history.

All business checking and savings accounts that receive operating deposits are included. The lender aggregates deposits across related accounts. If you use multiple accounts for operational reasons — a main operating account, a payroll account, a savings reserve — all are included in the statement package.

Personal accounts that primarily receive business deposits may also qualify under some programs, typically at 100% (no expense factor). Sole proprietors who run business through a personal checking account should ask their officer whether that account qualifies.

The 50% default is the lender's proxy for "roughly half your deposits went to operating costs." It avoids requiring detailed expense documentation for every applicant. For many businesses — retail, restaurants, construction, home services — 50% is a reasonable estimate.

For professional service businesses, consulting firms, and real estate professionals with lower overhead, the actual expense ratio is often 25–40%. In these cases, a CPA letter documenting the actual ratio is worth requesting before applying. The incremental qualifying income can meaningfully change the purchase price you're able to finance.

The letter must be on CPA letterhead with the CPA's license number. It should state the business name and EIN, describe the nature of expenses, and document the expense-to-revenue ratio for the look-back period (12 or 24 months). Some lenders also want the CPA to confirm the statements were prepared based on business records.

Most programs offer a 24-month look-back (averages more months for smoother income) or a 12-month look-back (fewer months, but used when income has grown significantly in the recent year). For seasonal businesses, the 24-month average smooths out peaks and troughs — the income doesn't spike on a strong season or collapse on a slow one.