How Many Months of Bank Statements Do You Need for a Home Loan?

When applying for a mortgage, one of the key documents lenders will request is your bank statements Bank statements provide details on your income, expenses, account balances, and cash flow Lenders use this information to verify your income, assets, and ability to afford the new mortgage payment.

But exactly how many months of bank statements do you need to provide to get approved for a home loan? The answer depends on the type of mortgage you’re applying for.

Traditional Mortgages Usually Require 2 Months of Bank Statements

For a conventional mortgage backed by Fannie Mae or Freddie Mac, most lenders will ask for around 2 months of your most recent bank statements. Some may request 3 months, but 2 months is generally sufficient.

They mainly want to verify that your income is consistent with what you stated on your loan application The bank statements help confirm your monthly income deposits

Lenders also want to see your spending habits and current balances to determine if you have enough reserves after closing costs and downpayment

So for a traditional mortgage, providing 2-3 of your most recent bank statements is standard protocol.

Bank Statement Loans Require 12-24 Months of Statements

However, there are specialized mortgage programs called bank statement loans that rely solely on your bank account deposits to document income.

With a bank statement loan, the lender verifies your income by analyzing deposits in your bank accounts over the last 12-24 months rather than looking at paystubs or tax returns.

These loans are designed for borrowers like self-employed, retirees, or those with non-traditional income sources that don’t have regular paystubs. The bank statements substitute for income documentation.

So for bank statement loans, expect to provide at least 12 months of bank account statements, and often up to 24 months. The lender needs more data to establish your income history over time.

What If I Don’t Have 12 Months of Bank Statements?

If you’re self-employed but don’t have 12+ months of business bank account history, you may still qualify for a bank statement loan. Many lenders will supplement with your personal bank statements.

Or if your business is less than 2 years old, some lenders can use projected future income to offset the shorter history. There are often ways to make it work.

Personal vs. Business Bank Statements

For self-employed borrowers, lenders generally want to see both personal and business bank statements. Personal statements help provide a complete picture of your finances. Business statements specifically document the company’s revenue and expenses.

Ideally provide 12-24 months of both personal and business statements when applying for a bank statement loan.

Paper or Online PDF Statements Accepted

Lenders will accept bank statements provided directly from your bank either in paper format or as online PDF statements downloaded from your bank portal.

Most borrowers today use online banking and can easily provide PDF statements. Either format typically works for lenders.

Authenticity Is Important

When submitting bank statements, it’s important they clearly show the account holder name, account number, time period covered, and are verifiably from your bank.

Lenders need to confirm the statements are authentic and unaltered. Tampered or fabricated bank statements are mortgage fraud.

Redact Sensitive Information

Before sending your bank statements, be sure to redact or black out any private account numbers and sensitive personal information. Social security numbers, account numbers, driver’s license ID, etc. should be concealed.

Only provide what the lender needs to verify your income and reserves. Blackout all other personal details.

Income Analysis from Bank Statements

When analyzing your bank statements, here are some key details lenders look for:

• Regular Deposits: They want to see regular monthly deposits indicating a stable income stream. Too much fluctuation raises concerns.

• Sufficient Balances: Statements should show adequate balances to cover downpayment and closing costs for the new mortgage.

• Lack of Overdrafts: Frequent overdrafts or negative balances are red flags of poor money management.

• ** Limited Cash Withdrawals:** Excessive ATM and cash withdrawals may indicate income isn’t fully reported.

Meeting these benchmarks on your bank statements make approval much easier.

How to Get Required Bank Statements

Here are some tips on getting the needed bank statements together for your mortgage application:

• Online Banking: Download PDF statements from your online bank account portal covering the needed timeframe.

• Bank Branches: Visit your local bank branch and request paper statements. Allow a few days for processing.

• Mortgage Broker: If using a broker, ask if they can request statements directly from your bank to save time.

• Accountant: Self-employed borrowers can request business bank statements from their accountant or bookkeeper.

Being organized and proactive with bank statements ensures quicker mortgage processing.

Include All Accounts on Application

When applying for a mortgage, be sure to disclose all bank accounts, not just ones used for the downpayment. Lenders want to see all accounts to analyze deposits and balances. Omitting accounts can delay approval.

Business owners should include both personal and business accounts on their application. Having everything upfront prevents delays caused by lenders requesting additional statements later.

Options If Lacking Bank Statements

Sometimes borrowers need a home loan but lack sufficient bank account history. For instance, newly self-employed buyers may not have 2 years of business bank statements yet.

In cases like this, many lenders can supplement bank statements with:

• 12-24 Months of Personal Bank Statements
• 2 Years of Tax Returns to Prove Income
• FICO Score Above 700
• Solid Employment History
• Higher Down Payment / Reserves

While bank statements are preferred, lenders have alternatives to make it work when statements are limited. Be open about your situation.

Talk to Your Loan Officer

If you don’t have the required bank statements for the mortgage you want, speak to loan officers at various lenders and explain your specifics. Many times they can customize options to fit your unique circumstances.

Being open and finding an experienced lender is key to getting approved when bank statements are limited. Discuss your situation and explore your options.

The Takeaway

When applying for a mortgage, expect your lender to request bank statements to verify your income, assets, and monthly budgets. For traditional loans, around 2 months of statements is common. But for bank statement loans, 12-24 months is needed.

Work closely with your loan officer and provide as many complete and authentic bank statements as possible. This gives lenders the details needed to approve your home loan with confidence.