Bank Statement Loans in California | 12 Month Bank Statement Mortgage

Understanding Bank Statement Mortgage Loans

If you have a non-traditional source of income or you are self-employed in California, you may face challenges in obtaining a mortgage financing from banks. At LBC Mortgage, we know about such problems and may offer effective solutions.

Since many self-employed borrowers work on commission and receive other types of income, they don't fit the typical borrower profile. That's why they have difficulty getting the expected loan amount from the bank. As banks try to minimize risks, they may delay pre-approval. Then, they determine the final outcome whether you will obtain the financing or get rejected in a competitive market like California.

At LBC Mortgage, our team will guide you through the whole process and show how California bank statement loans can be beneficial for you.

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What is a California Bank Statement Loan?

With 12 month bank statements and no tax returns required, you can qualify for a California bank statement loan program. You may use this loan, which can go up to maximum amount of $3 million, to buy your primary residence as well as a second home or an investment property.

To determine your qualified income for a 12-month bank statement loan, the underwriter will add up all of your bank statements for a full year, divide that total by 12, and then use that figure to estimate your monthly income. The amount you might be eligible for in a home loan can then be calculated using that number.

Additionally, you can select from 5/1, 71, or 10/1 ARMs, as well as fixed rates for 15 or 30 years, just like with traditional loans. Compared to a traditional home loan or an FHA loan, this is a popular alternative.

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Loan Features

No tax returns required
Qualified based on personal or business statements for the most recent 12- 24 months
Loan amount up to $3 million
10% Down payment with no mortgage insurance
Owner occupied, 2nd home, Investment Property
Interest Only Loan Options
30-year fixed option available
Non-Perfect Credit OK
Gift Funds for Down Payment
W2 co-borrower ok, income and employment traditionally verified
Retirement income is usable with verification (1099, award letter, etc)

Loan Requirements

2 years of self-employment verified through CPA or business license
Low number of NSF or O/Ds
12-month of mortgage or rental history
3-month reserves

Why Choose a Bank Statement Mortgage in California?

California is an optimal state for bank statement mortgages because of its diverse economy and high rate of self-employment. At LBC Mortgage, we know that traditional methods of verifying income may not be the best option because a large segment of the population depends on multiple sources of income. For the following reasons, a bank statement mortgage could be your perfect solution.

Flexibility in Income Verification

W-2s and tax returns, which are necessary for traditional mortgages, may not fairly represent self-employed people's income. Bank statement mortgages offer flexibility by considering all income deposited into your account. And they provide a clearer picture of your earning potential. Many Californians who make a significant amount of income but do not have a regular paycheck depend on this flexibility. The ability to use bank statements as evidence of income makes homeownership possible for individuals who may not have qualified otherwise. Instead of focusing only on a single year, this approach considers the whole financial picture.

Lenders can gain a deeper understanding of the borrower's income dynamics and its stability by looking at a longer time frame. This thorough method of confirming income is one of the main advantages of a bank statement mortgage. Without being restricted by conventional documentation requirements, it enables a higher number of people to be eligible for a mortgage based on their actual financial situation. Individuals with irregular income patterns or multiple sources of income may find this especially helpful.

Higher Approval Rates for Self-Employed Borrowers

Since self-employed individuals' income is unpredictable, many people face difficulties getting approved for traditional mortgages. Bank statement mortgages give people with non-traditional incomes a higher approval rate because they take into account your cash flow and the general health of your business. This type of mortgage shows that self-employed individuals often have strong financial profiles despite the instability in their income. Lenders can determine the borrower's true earning potential by examining bank statements. This is why more self-employed people have better chance to be approved.

The approval procedure is customized to fit the particular financial situation of self-employed borrowers. Lenders use bank statements to evaluate a borrower's financial health rather than tax returns, which might not accurately reflect their income. The possibility of being approved for a mortgage can greatly increase by using this strategy. It is especially helpful for people who still have a solid earnings overall but may have significant business expenses that lower their taxable income. For many independent contractors in California, bank statement mortgages are a decent alternative due to their higher approval rates.

The Benefits of a Bank Statement Mortgage for the Self-Employed

Easier Qualification Process. A bank statement mortgage's ability to streamline the qualifying process for self-employed borrowers is one of its main benefits. People can demonstrate their income using personal or business bank statements rather than complicated tax returns or pay stubs. This alternative documentation allows lenders to assess income based on cash flow rather than taxable income. That's why it often presents a more objective financial picture for self-employed individuals.
Flexible Income Assessment. When self-employed income varies from month to month, it can be challenging to prove consistency using conventional documentation. On the other hand, bank statement mortgages provide flexibility by examining deposits over a 12- to 24-month period. By averaging the borrower's income, lenders can smooth out fluctuations and get a more complete picture of their capacity to make mortgage payments.
Lower Documentation Requirements. Traditional mortgage applications need a lot of paperwork, such as business profit, loss statements and tax returns. A bank statement mortgage significantly lowers the amount of documentation needed. Borrowers typically only need to submit bank statements for 12 to 24 months, either personal or business, which speeds up and simplifies the process.
Customizable Loan Terms. Flexible terms are offered by many lenders who offer bank statement mortgages, enabling borrowers to select the loan arrangements that best meet their needs. Whether it's adjustable-rate mortgages (ARMs) or fixed-rate options, self-employed borrowers have the ability to customize their mortgage terms. They can be adjusted according to their financial situation and future goals.

How Can LBC Mortgage Help?

For many years, we at LBC Mortgage have been assisting eligible borrowers in obtaining the best possible home loan terms. Our extensive network of lenders is aware of the special requirements of non-traditional borrowers, including independent contractors and those with trouble proving their income. We are ready to put in the necessary investigation and work to help you obtain the best rate on your bank statement loan in California.

LBC Mortgage can assist you with a variety of loan types, including other non-qm products. When a conventional mortgage is not the the right fit, we offer VOE loans, asset depletion, and other non-traditional loan types that welcome people with alternative documentation. For additional information and to find out how we can assist you get approved and secure financing, get in touch with us today.

Author:

Alex Shekhtman CEO & Founder, LBC Mortgage

Frequently Asked Questions

1. What bank statement mortgage options does LBC Mortgage offer for self-employed borrowers in California?

LBC Mortgage provides bank statement mortgage programs in California designed specifically for self-employed borrowers and business owners whose income does not fit traditional W-2 verification models. These programs allow qualification using 12 or 24 months of personal or business bank statements, with income calculated based on average monthly deposits rather than net taxable income reported on tax returns.

This structure is well suited for entrepreneurs who use legitimate deductions to reduce taxable income while maintaining strong cash flow. Bank statement mortgages can be used for primary residences, second homes, and in some cases investment properties, depending on program guidelines. Fixed-rate and adjustable-rate options are available, allowing borrowers to choose between payment stability and initial rate flexibility. Loan amounts often extend into jumbo ranges, reflecting California property values. By focusing on real cash inflow rather than adjusted taxable income, these programs allow self-employed borrowers to qualify in a way that more accurately reflects their financial capacity and long-term sustainability.

2. Can business owners qualify for a bank statement mortgage in California without providing tax returns?

Business owners in California can qualify for a bank statement mortgage without providing personal tax returns by using alternative income documentation. Instead of relying on net income figures that may be reduced by depreciation or business expenses, lenders evaluate 12 or 24 months of bank statements to determine average monthly income. Deposits are reviewed for consistency, and certain non-income items may be excluded to calculate a reliable qualifying figure.

Borrowers are typically required to demonstrate at least two years of self-employment or business ownership and may be asked to provide a CPA letter or business verification confirming operational status. Because tax returns are not used, these programs are particularly useful for entrepreneurs whose true earning power is not accurately represented on paper. Down payment requirements are generally higher than conventional loans to balance documentation flexibility. This approach allows business owners to access home financing while aligning qualification standards with real-world cash flow rather than accounting strategies.

3. How much down payment is required for a bank statement mortgage in California?

The down payment required for a bank statement mortgage in California depends on several factors, including credit score, property classification, and the strength and consistency of bank deposits. Many programs allow down payments starting around 10% for strong borrower profiles, while others require 15% to 20% to offset the use of alternative income documentation. Primary residences often qualify for lower down payment thresholds compared to second homes or investment properties.

In addition to the down payment, lenders commonly require post-closing reserves, measured in months of mortgage payments, to ensure liquidity after the transaction closes. These reserve requirements help protect borrowers during income fluctuations that are common among self-employed individuals. The purpose of higher equity contributions is to maintain loan stability while still providing access to financing. By balancing flexibility with conservative leverage, bank statement mortgages enable business owners to purchase or refinance property without overextending financially.

4. What types of bank statements are used to qualify for a bank statement mortgage?

To qualify for a bank statement mortgage in California, borrowers typically submit either 12 or 24 months of consecutive bank statements. These statements may be personal, business, or a combination of both, depending on how income is received and structured. Lenders review deposits to determine an average monthly income figure, excluding transfers, refunds, or other non-income items. Business bank statements may be adjusted using an expense factor to account for operating costs, while personal statements often reflect gross deposits more directly.

The review process focuses on consistency rather than peak months, providing a realistic picture of ongoing earning capacity. Borrowers are expected to show stable or increasing deposit trends and maintain sufficient reserves. This method allows self-employed individuals with fluctuating monthly income to qualify using long-term averages instead of rigid employment verification. The result is a more accurate assessment of repayment ability aligned with entrepreneurial income patterns.