A bank statement loan does not treat your deposits as income. It multiplies your average deposits by an expense factor determined by what your business does and how many people it employs, and the remainder is what you qualify on. A consultant working alone and a restaurant with eight employees can deposit the same money and be handed radically different qualifying income.
That factor is the whole game, and almost nobody explains it before you apply.
The table that decides your loan
From CMG Financial's Non-QM Sharp Series guidelines (NMLS #1820, revised 09/21/2026), Option 1 qualifying income is a percentage of gross deposits over 12 or 24 months, using an expense ratio factor set by business type and employee count:
Service businesses (the guidelines name consulting, accounting, legal, therapy, counseling, financial planning, insurance and information technology):
- 0 employees: 15% expense factor
- 1 to 5 employees: 30% expense factor
- More than 5 employees: 50% expense factor
Product businesses (retail, food services, restaurant, manufacturing, contracting, construction):
- 0 employees: 25% expense factor
- 1 to 5 employees: 50% expense factor
- More than 5 employees: 85% expense factor
The expense factor is what gets subtracted. A solo consultant at a 15% factor keeps 85% of deposits as qualifying income. A construction company with six employees at an 85% factor keeps 15%. The guidelines give the arithmetic directly: $25,000 in average monthly deposits multiplied by a 50% expense factor produces $12,500 in qualifying income.
Run your own numbers through both ends of that range and you will see why the classification of your business is not a clerical detail.
Three ways to qualify, not one
Most borrowers think "bank statement loan" is one product. In the Sharp Series it is three options, and you pick the one your business flatters:
Option 1, the expense ratio. The table above. Fast, and it lives or dies on your category and headcount.
Option 2, a third-party prepared profit and loss statement. Qualifying income is the lower of the net income on a validated third-party prepared P&L or the income you disclosed on the initial signed 1003. Business bank statements are used to validate that P&L, and the gross revenue on the P&L has to line up with the statements.
Option 3, covered separately in this series alongside written verification of employment.
Whichever option, the guidelines set a floor: qualifying income is the lower of the formula result or the monthly income you put on your initial application, unless you provide a signed explanation for why the application showed less. Understate yourself on the 1003 and you can cap your own loan.
The requirements people trip over
Twelve or twenty-four consecutive months. Most recent available at application. A file submitted with fewer than twelve consecutive months is not eligible for purchase by the investor. Not negotiable.
Minimum 25% ownership, documented by CPA letter, operating agreement or equivalent. If you own at least 25% but less than 100%, you qualify on the net income multiplied by your ownership percentage. Own a third of a profitable firm and you qualify on a third of it.
Two years of business existence, evidenced by a business license, a letter from your tax preparer, a Secretary of State filing or equivalent.
A business narrative. The guidelines want a written description covering the business profile, location and associated rent, number of employees and contractors, estimated cost of goods sold, materials, trucks and equipment, and whether the client base is commercial or retail. An internet search of the business is also required in the file. If your business has no web presence, the underwriter has to certify that.
No tax returns in the file. This one surprises people. A bank statement loan submitted with tax returns or transcripts must follow full documentation guidelines instead, and a file using bank statement income with returns or transcripts present is ineligible for sale to the investor. You choose a lane.
Who is not eligible
The program is built for an active U.S. business generating stable revenue. Borrowers whose income comes only from passive or portfolio sources are out, and the guidelines name examples: managing your own rentals, distributions from a limited partnership, day trading, property flipping.
Borrowers paid on a 1099 by a single company are also excluded from bank statement qualification and have to use full documentation or the one-year streamline option. If you are a contractor with one payer, this is not your program, and there is a better one.
Co-mingling, and the mistake that costs you the rate
Co-mingling personal and business money in a personal account is not permitted. Evidence of co-mingling requires the loan to be submitted and qualified as a business bank statement loan instead, which changes the expense factor that applies to you and can change your qualifying income materially.
If you are self-employed in Scottsdale and think a home purchase is somewhere in the next two years, the cheapest thing you can do today is separate the accounts and stop running personal spending through the business account. It costs nothing and it protects the calculation.
Why bring this file to us
- We run the expense factor before you apply. The difference between a 15% factor and a 50% factor is the difference between qualifying and not, and it is knowable on day one.
- We compare bank statement income against your returns honestly. Sometimes the write-offs that saved you tax also cost you the house, and sometimes full documentation still wins. You should see both numbers.
- We know which files break. Co-mingled accounts, one negative month, a 1099 from a single payer: each one moves you to a different program, and finding that out in underwriting is expensive.
- Broker model. Multiple investors rather than one bank's shelf, which is what a file like this needs when the first answer is no.
- You talk to the principal. Ricky Khamis is President of EPiQ Lending, NMLS #173141, lending in Arizona since 1999. Direct line: (480) 999-9842.
EPiQ Lending is NMLS #1936984, at 7975 N. Hayden Road, Suite A-101 in Scottsdale. Verify all of it before you trust any of it: Ricky's EPiQ Lending profile, the Scottsdale branch, and the license itself at NMLS Consumer Access. Hold every lender to that standard, including us.
Send me twelve months of statements and a two-line description of your business, and I will tell you which expense factor you land in before you apply anywhere.
Program figures in this post are from the CMG Financial (NMLS #1820) guideline set named above, as published on the revision date given. They describe one investor's program at one point in time. Other investors price and underwrite the same borrower differently, guidelines change without notice, and nothing here is an offer of any specific program or terms. Confirm current eligibility on your own file before you plan around any of it.
Equal Housing Opportunity. This is general information, not a commitment to lend or an offer to extend credit. Rates, terms, and program guidelines change and depend on credit approval, property appraisal, income and asset verification, and other qualifying factors. Not all applicants will qualify. Non-QM, asset-based and business purpose financing carry different pricing, terms and consumer protections than agency financing. Consult your tax advisor regarding the tax treatment of any income or distribution strategy.
Find out which documentation option qualifies you for the most
Bank statements, a third-party P&L and full documentation routinely produce very different qualifying income from the same business. Tell me the shape of yours and I will run all three.
