Bank Statement Income Formula Explained
The math behind the Bank Statement Income Calculator: the equation, the 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, for self-employed borrowers without traditional pay stubs.
The Formula
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.
Turn Your Bank Statement Income Estimate Into a Real Pre-Approval
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