Bank Statement Loans vs Tax Return Loans for Self-Employed Borrowers
Self-employed borrowers often have multiple ways to qualify for a mortgage. The two most common methods are traditional tax return underwriting and bank statement underwriting.
Rockstar Mortgage has helped entrepreneurs and business owners across Georgia qualify for home loans since 2002 and has been recognized as Best of Gwinnett Mortgage Company for more than 13 years.
What Is a Tax Return Mortgage?
A traditional mortgage evaluates income based on adjusted gross income reported on personal tax returns.
What Is a Bank Statement Mortgage?
A bank statement mortgage evaluates income based on deposits shown on 12–24 months of personal or business bank statements.
Key Differences
| Criteria | Tax Return Loan | Bank Statement Loan |
|---|---|---|
| Income Basis | Adjusted Gross Income | Bank Deposits |
| Impact of Write-Offs | High | Low |
| Documentation | Tax Returns | Bank Statements |
| Best For | Low deductions | High revenue businesses |
Which Option Is Better?
Entrepreneurs who take significant tax deductions often benefit from bank statement loans because they better reflect real business cash flow.