Self Employed
Jennifer Ko
Founder, Koast Capital
Self-employment offers independence — but it can complicate mortgage qualification. When you deduct legitimate business expenses, your taxable income often appears much lower than your actual cash flow. Bank statement loans were created to bridge that gap.
Instead of W-2s or tax returns, the lender analyzes 12 or 24 months of your bank statements to establish an average monthly income. Deposits are reviewed, large non-recurring transfers are typically excluded, and a consistent income picture is constructed from what actually moved through your account.
Business owners using business accounts should note that lenders typically apply an expense ratio — often 50% — to account for overhead before calculating qualifying income. Using personal statements avoids this adjustment.
If bank statements don't clearly present your income, a CPA-prepared Profit & Loss statement may be used instead. Some programs also accept a Verification of Employment letter for W-2 employees receiving significant supplemental income. These options give self-employed borrowers meaningful flexibility without requiring a conventional paper trail.
Many of my clients have excellent cash flow and financial discipline — their tax returns simply don't reflect it. That's exactly why these programs exist.
Jennifer Ko, Founder of Koast Capital
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