Advanced Funding Solutions, NMLS #1277693, is a California mortgage brokerage working with 100+ wholesale lenders, several of which specialize in bank statement income qualification for self employed borrowers. Pricing is set by the funding lender at application based on credit, LTV, and deposit profile.
Key Takeaways
- Bank statement loan rates are not posted on lender websites the way conventional rates are. They are set at application based on the full borrower profile
- FICO and loan-to-value are the two primary pricing levers, just as with conventional loans
- The expense factor each lender applies to business deposits affects qualifying income, which in turn affects whether a lower LTV is achievable
- The statement period (12 vs 24 months) can affect both qualifying income and pricing tier depending on the lender
- A wholesale broker who works with multiple non-QM lenders can compare expense factors and pricing across investors for the same borrower scenario
How Bank Statement Loan Rates Are Set
Bank statement loans are non-QM products. Because they sit outside the qualified mortgage guidelines set by the Consumer Financial Protection Bureau, they are not purchased by Fannie Mae or Freddie Mac. Each wholesale lender prices them using its own risk model rather than agency loan-level pricing adjustments.
The result is that bank statement loan pricing is not standardized across lenders the way a 30-year conventional rate is. Two lenders looking at the same borrower scenario can price differently based on their current appetite for that risk tier, their expense factor methodology, and their capital position at that moment. This variability is why comparison across multiple lenders matters for this product type.
All rates, points, and closing costs are determined by the funding lender at the time of application based on the complete borrower profile. Any estimate discussed before a formal application is illustrative only and is not a commitment to lend.
How FICO and LTV Affect Pricing
The two most consistent pricing levers across non-QM lenders are credit score and loan-to-value. Both work the same way they do on conventional loans: stronger credit profiles and lower LTV ratios generally produce more favorable pricing.
Most bank statement lenders tier their pricing at defined FICO breakpoints. Moving from one tier to the next can produce a meaningful rate difference. For borrowers near a breakpoint, it is sometimes worth taking a few months to improve the credit profile before applying if the scenario allows for it. Whether that tradeoff makes sense depends on the gap between current score and the next tier, the rate savings achievable, and the urgency of the transaction.
LTV matters for a related reason. Lower down payment means more lender risk on the loan, which translates into higher pricing. Some bank statement borrowers who can choose between a smaller down payment and a lower rate find that putting more down produces a better total cost outcome. A wholesale broker can model both scenarios before a formal application is submitted.
12 vs 24 Month Statements and Pricing
Most bank statement programs are available with either a 12-month or 24-month statement review period. The 12-month path requires fewer statements and can capture more recent income trends, which is relevant for borrowers whose deposits have increased recently. The 24-month path shows a longer income history, which may support stronger qualifying income for borrowers with consistent deposits over two years.
Some wholesale lenders price the 12-month and 24-month paths identically. Others add a small margin to the 12-month path to reflect the shorter income history and higher income volatility risk. Which path produces the better outcome for a given borrower depends on the deposit history across both periods and each lender's current pricing schedule. AFS reviews both options when the deposit history supports it.
How the Expense Factor Affects Qualification
The expense factor is the percentage of business bank deposits that the lender counts as usable qualifying income. If a lender uses a 50% expense factor on $30,000 per month in gross business deposits, the qualifying income is $15,000 per month. A lender with a 65% expense factor on the same deposits produces $19,500 per month in qualifying income. The higher qualifying income from the more favorable expense factor may allow a larger loan amount or a lower LTV, which can affect pricing.
Expense factors vary by wholesale lender and are set at the program level. They are not negotiable by the borrower. A mortgage broker who works with multiple non-QM investors can identify which lender's expense factor produces the strongest qualifying income calculation for a given borrower's deposit mix. This is one of the practical advantages of using a broker rather than going directly to a single lender for a bank statement loan.
Personal bank statement programs generally do not use an expense factor the same way. Income from personal deposits is typically calculated at a higher percentage of gross deposits, which is why some self employed borrowers with personal-only deposits qualify for a larger loan under the personal statement path than the business path at the same lender.
Business vs Personal Statements
The documentation path affects how qualifying income is calculated, which affects how much loan a borrower can support, which affects whether a lower LTV is achievable. It does not directly change the rate tier for the same loan amount and FICO profile.
Business bank statements require the lender to assess the nature of the deposits, the expense factor, and in some programs the business's operating expense ratio confirmed by a CPA letter. Personal bank statements require the lender to assess the deposit sources and consistency. Each path has its own documentation requirements set by each funding lender.
Some borrowers have both personal and business accounts with usable deposit patterns. When that is the case, a wholesale lender may allow deposits from multiple accounts to be combined under program guidelines. Whether blending is permitted and how the income is calculated are set by the specific lender and program.
Loan Amount and Property Type
Non-QM lenders generally tier pricing by loan amount. Loans above the conforming limit are priced differently from conforming-sized bank statement loans. At jumbo loan sizes, the available lender pool is narrower, and reserve requirements and FICO floors are typically higher. Some lenders offer bank statement programs at jumbo loan sizes; others cap out at the conforming limit. Loan amount and property type both affect which lenders in the non-QM space are available for a given scenario.
Investment property bank statement loans typically carry higher pricing than owner-occupant loans at the same LTV and FICO. Second homes generally fall between primary residence and investment property in terms of pricing. Specific occupancy-based adjustments are set by each funding lender.
How a Broker Fits Into the Rate Picture
A single-lender bank will quote you their own rate. That rate is based on their own expense factor, their own FICO tiers, and their current capital appetite. A wholesale mortgage broker who works with 100+ lenders can compare the same borrower scenario across multiple non-QM investors simultaneously.
For bank statement loans specifically, the comparison is meaningful because expense factors, qualifying income methodologies, FICO pricing tiers, and reserve requirements vary enough between lenders that the best option for one borrower may not be the best option for another with a similar profile. The difference comes down to the specific deposit pattern, the FICO tier, and which lender is currently most competitive for that combination.
Advanced Funding Solutions works with 100+ wholesale lenders, several of which specialize in non-QM bank statement qualification for California self employed borrowers. We compare options across investors and identify which programs may be a fit for a given scenario. All loans are subject to credit, income, asset, property, and underwriting approval.
Getting Started
The most useful information to have at the start of a bank statement loan inquiry: 12 or 24 months of bank statements (personal, business, or both), a sense of the property price and down payment, the purpose (purchase or refinance), and the property type and occupancy. From there, Advanced Funding Solutions can identify which wholesale lenders may be a fit for the scenario and discuss the documentation path most likely to produce a favorable qualifying income calculation.
Bank statement loan pricing is not quoted before a formal application. Any figures discussed beforehand are illustrative only and are not a rate lock, commitment, or offer to lend. Final rates, points, and closing costs are disclosed in writing during the formal application process as required by state and federal law.
"Most self employed borrowers who call us about bank statement loans don't realize how much the expense factor varies across lenders. Two lenders looking at the same deposits can come up with very different qualifying income figures. That difference can change the loan amount available and the LTV, which then affects the rate. It's not just about finding the lowest advertised rate. It's about which lender's methodology actually fits the deposit pattern."
Leo Teplitsky, Mortgage Broker | Founder, Advanced Funding Solutions · (818) 478-2555
Frequently Asked Questions
Why are bank statement loan rates higher than conventional rates?
Bank statement loans are non-QM products. Lenders price them to reflect the documentation difference from standard agency guidelines and the additional judgment involved in calculating qualifying income from deposits. Specific pricing is set by each wholesale lender based on credit, LTV, loan amount, statement period, and other program factors.
Does using business bank statements produce a lower rate than personal statements?
Not directly. The statement type affects the qualifying income calculation, not the rate tier. Business deposit analysis involves an expense factor that reduces the usable income figure. Whether personal or business statements produce a stronger qualification depends on the borrower's deposit patterns and each lender's expense factor methodology. Rate is driven by FICO, LTV, and loan amount.
Does the statement period (12 vs 24 months) affect pricing?
Some wholesale lenders price 12-month and 24-month bank statement programs differently. The 12-month path carries slightly more income volatility risk for the lender, so some investors add a margin to it. Others price both periods identically. Which statement period is better for a given borrower depends on deposit consistency across the periods reviewed.
Can I get a bank statement loan with a lower credit score in California?
Some wholesale lenders accept lower FICO scores on bank statement programs, typically at higher pricing tiers and with additional down payment or reserve requirements. Each lender sets its own credit floor and pricing adjustment schedule. AFS works with multiple non-QM lenders and can identify which currently offer bank statement options for a given credit profile. All loans are subject to credit, income, asset, property, and underwriting approval.
Does Advanced Funding Solutions quote bank statement loan rates online?
No. Bank statement loan pricing is set by the funding lender at the time of application based on credit, LTV, loan amount, statement type, and current market conditions. Rates change without notice and are not quoted before a formal application. AFS can discuss your scenario and identify which lenders may be a fit. Contact us at (818) 478-2555 or use the quote form.
Advanced Funding Solutions Inc. is a licensed mortgage brokerage, not a lender. NMLS #1277693. CA DRE #01973518. Licensed in California. All loans are subject to credit, income, asset, property, and underwriting approval. Programs, rates, terms, and conditions are set by the funding lender and subject to change without notice. Not a commitment to lend. Equal Housing Opportunity.