Bank statements are not the same as qualifying self-employed income

If you are self-employed, a bank statement can show money moving through an account. It does not automatically tell a lender what monthly income may be used to qualify you.

Why the difference? Deposits can include revenue, transfers, refunds, borrowed funds, or money that belongs to the business rather than to you personally. A lender may need to understand the business structure, expenses, stability, and whether taking money out would weaken the business.

For many conventional underwriting reviews, qualifying income is calculated from complete tax returns and related business information, followed by a documented cash-flow analysis. Fannie Mae and Freddie Mac both describe analysis of self-employed income rather than simply adding up deposits. Some programs may use bank-statement-based documentation, but those are program-specific. They may apply their own rules for eligible deposits, expenses, history, and reserves.

So do not estimate your qualifying income by totaling one month of deposits. Ask which program applies, which records are required, and how the lender will treat business and personal funds.

Important notes

• Educational information only; not legal, tax, financial, or lending advice.
• This script does not state that any particular bank-statement program is available. Documentation, income calculations, products, rates, terms, eligibility, and approval depend on the lender, program, borrower, property, transaction, and applicable requirements.
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