If you’re self-employed in California, you already know the frustration: your tax returns show low taxable income — by design — but your actual bank deposits tell a completely different story. I’ve been placing bank statement loans for California self-employed borrowers since 2007. The question I get asked most is: 12 months or 24 months? The answer changes your qualifying income, your rate, and sometimes whether you get the home. I’m Michael DiVita — DRE #01372066 | NMLS #241655, DiVita Home Finance (DRE #01818285 | NMLS #323700), Tiburon, CA. Call me at (800) 239-1103.
What Is a Bank Statement Loan?
A bank statement loan is a type of non-QM (non-qualified mortgage) that allows self-employed borrowers to qualify using bank deposits instead of W-2s or tax returns. Lenders look at your average monthly deposits over a set period — either 12 or 24 months — and apply an expense ratio to estimate your net income. Your Schedule C, your write-offs, your business deductions — none of that is held against you. Only your actual deposits count.
For example, if your business deposits average $25,000 per month and the lender uses a 50% expense ratio, your qualifying income is $12,500 per month — regardless of what your tax return shows. These loans are widely used by tech founders, consultants, real estate investors, business owners, gig economy workers, and anyone whose tax strategy legitimately reduces reported income.
12-Month vs. 24-Month: What’s the Difference?
The core difference is the look-back window. Both programs average deposits and apply an expense ratio — but the time frame changes your qualifying income and who each program benefits.
12-Month Bank Statement Loans
The lender reviews only the most recent 12 months of deposits. This is ideal if your income has been growing — your recent deposits are higher than they were two years ago, so using only the last 12 months produces a higher qualifying income. It’s also simpler to document: one year of statements instead of two.
Best for: Borrowers whose income is growing, newer businesses (some lenders allow 1 year in business for 12-month programs), or anyone who had a difficult year two years ago they don’t want averaged in.
Trade-off: Rates on 12-month programs typically run 0.125%–0.25% higher than 24-month programs, because the shorter history is considered slightly higher risk.
24-Month Bank Statement Loans
The lender averages deposits over two full years. If your income has been consistent or gradually increasing, this often produces a similar qualifying income as 12 months — but at a better rate. Two years of stable deposit history signals lower risk to the lender.
Best for: Established business owners with consistent 2-year deposit history who want the lowest available rate.
Trade-off: If you had one bad year in the past 24 months, it drags down your average. In that case, 12 months may produce higher qualifying income even at a slightly higher rate.
How Lenders Calculate Your Qualifying Income
The formula is straightforward:
Total deposits ÷ number of months = average monthly deposits
Average monthly deposits × (1 – expense ratio) = qualifying monthly income
Qualifying monthly income × 12 = qualifying annual income
Expense ratios typically run 40%–50% for business bank statements. For personal bank statements, the ratio can be as low as 10% if a licensed CPA provides a letter documenting your actual business expense percentage. This CPA letter can significantly increase qualifying income — it’s worth having your accountant prepare one. DiVita Home Finance works with CPAs on this regularly for Bay Area self-employed clients.
Side-by-Side Example
A consultant in Marin County with the following deposit history:
- Year 1 (older): Average monthly deposits of $18,000
- Year 2 (recent): Average monthly deposits of $28,000
12-month program: $28,000 × 50% = $14,000/month qualifying income ($168,000/year)
24-month program: ($18,000 + $28,000) ÷ 2 = $23,000 × 50% = $11,500/month ($138,000/year)
In this scenario, 12 months gives $30,000 more in annual qualifying income — which could be the difference between qualifying for a $1.5M home versus settling for $1.2M in a market like Marin.
California Requirements for Bank Statement Loans (2026)
- Self-employment: 2 years self-employed (some lenders allow 1 year for 12-month programs)
- Credit score: Minimum 620–660 depending on lender; better pricing above 700
- Down payment: Typically 10–20% depending on loan amount and credit score
- Loan amounts: Up to $4M+ for jumbo bank statement loans
- Reserves: 3–12 months of mortgage payments in liquid or investment accounts
- Property types: Primary residence, second home, or investment property
Frequently Asked Questions
Can I use a bank statement loan to buy a home in the Bay Area or Marin County?
Yes — bank statement loans are available up to $4M+, which covers the full range of Bay Area and Marin County purchase prices. These are non-QM (portfolio) loans, not Fannie/Freddie products, so the conventional conforming limits don’t apply the same way. DiVita Home Finance has placed bank statement loans for self-employed buyers in Tiburon, Mill Valley, San Francisco, and throughout the Bay Area. If your tax returns don’t reflect your actual income, call (800) 239-1103 to discuss your options.
Is the interest rate on a bank statement loan higher than a conventional mortgage?
Generally yes — bank statement loans carry a rate premium of 0.5%–1.0% above comparable conventional or jumbo rates, reflecting the non-QM nature of the program. The exact premium depends on your credit score, down payment, loan amount, and which lender we match you with. For many self-employed borrowers, the higher rate is worth it because conventional financing is simply not available given their tax return income. DiVita Home Finance shops multiple non-QM lenders to find the most competitive pricing for your profile.
Do I need to show both personal and business bank statements?
It depends on the program. Business bank statement loans use your business account deposits and apply an expense ratio (typically 50%, or lower with a CPA letter). Personal bank statement loans use your personal account deposits — the assumption is that all deposits are income. Many lenders offer both options, and DiVita Home Finance will run your numbers both ways to determine which produces the higher qualifying income. If you have significant deposits in both, a hybrid approach may be available.
Related Resources
- Bank Statement Loans California — Full Guide
- Self-Employed Mortgage California
- Jumbo Loans Bay Area 2026
- DSCR Loans: Qualify on Rental Income
Talk to Michael Directly
DiVita Home Finance | Tiburon, CA | Licensed since 2007. Michael DiVita DRE #01372066 | NMLS #241655. Company DRE #01818285 | NMLS #323700.
💬 Text: (310) 849-9124
