Bank Statement Income Formula Explained
The Bank Statement Income formula explained in plain English: the equation behind the Bank Statement Income Calculator, its variables, and the assumptions it makes.
By Onias Derilus, Mortgage Capital · NMLS# 1859012 · Last Updated: June 2026
It estimates the qualifying income a bank-statement lender will use by averaging deposits across 12 or 24 months of statements. It fits self-employed borrowers without traditional pay stubs.
The Bank Statement Income Formula, Explained
Qualifying income = (total deposits × (1 − expense factor)) / months
Bank-statement loans suit borrowers whose tax returns understate their real cash flow due to deductions. Lenders apply an expense factor — often around 50% for business accounts — to estimate net income from gross deposits.
Personal-account programs may use a lower or no expense factor. The calculator lets you adjust the factor and the period (typically 12 or 24 months) to match the program you are applying for.
The formula is only the starting point. Open the bank statement income calculator to plug in your own numbers and see the result instantly. For a rate tied to your actual file, talk to a licensed broker before you decide.
Turn Your Bank Statement Income Estimate Into a Real Pre-Approval
Get a personalized rate quote from a licensed Florida mortgage broker — no obligation. NMLS# 1859012.
Rates are illustrative only. APR and payments vary by credit score, loan amount, and market conditions. Subject to credit approval. Not a commitment to lend. NMLS# 1859012. Equal Housing Lender.