Stated income loans (bank statement programs) serve self-employed Arizona borrowers who can demonstrate strong cashflow but have difficulty qualifying through traditional income verification. Understanding eligibility requirements helps you determine if this program is right for your situation.
Basic Qualification Requirements
Credit Requirements
- Minimum Credit Score: 650 (some programs accept 620)
- Preferred Score: 680+ for best terms
- Recent Credit Events:
- • Bankruptcy: 2+ years since discharge
- • Foreclosure: 3+ years completion
- • Late payments: Minimal in last 12 months
Down Payment & Reserves
- Minimum Down Payment: 10-20%
- Preferred: 20%+ (better rates)
- Cash Reserves: 6-12 months PITI
- Source Documentation: Required
- Seasoning: 60+ days in account
Self-Employment History
- Minimum: 2 years in business
- Same Industry: Preferred
- Documentation:
- • Business license
- • Articles of incorporation
- • DBA registration
- • CPA letter verifying business
Debt-to-Income Ratio
- Maximum DTI: Typically 45-50%
- Calculation: Based on bank deposits
- Includes: All monthly debt payments
- Preferred: Under 43% DTI
- Note: More flexible than conventional
Ideal Candidate Profiles
1. Self-Employed Business Owners
Best Fit: Established Arizona business owners with strong cashflow but high business deductions
Examples:
- General contractors
- Restaurant owners
- Medical practitioners
- Legal professionals
- Retail business owners
Key Qualifiers:
- Consistent bank deposits
- 2+ years in business
- Strong credit history
- Significant reserves
2. Independent Contractors
Best Fit: 1099 contractors with variable income and legitimate business expenses
Examples:
- HVAC technicians
- Electricians/plumbers
- IT consultants
- Marketing specialists
- Construction professionals
Key Qualifiers:
- Consistent client base
- Regular deposits
- Business documentation
- Track record of work
3. Real Estate Professionals
Best Fit: Agents, brokers, and investors with commissioned or variable income
Examples:
- Real estate agents
- Real estate brokers
- Property flippers
- Real estate investors
- Property managers
Key Qualifiers:
- Active license
- Commission history
- Business expenses
- Strong market knowledge
4. Professionals with Side Businesses
Best Fit: W-2 employees with significant self-employment income on the side
Examples:
- Rental property owners
- E-commerce sellers
- Freelance consultants
- Online business owners
Key Qualifiers:
- Multiple income streams
- Business documentation
- Combined cashflow strength
Required Documentation
Bank Statements (Primary Documentation)
- ✓ 12-24 months business bank statements
- ✓ 12-24 months personal bank statements (if applicable)
- ✓ All pages including cover sheet
- ✓ Must show consistent deposits
- ✓ Transactions visible (not redacted)
- ✓ Consecutive months (no gaps)
Business Documentation
- ✓ Business license (active)
- ✓ Articles of incorporation or DBA
- ✓ CPA letter verifying self-employment
- ✓ Business website/marketing materials
- ✓ Professional licenses (if applicable)
- ✓ Contracts or client agreements
Asset Documentation
- ✓ Most recent 2 months statements (all accounts)
- ✓ Checking, savings, investment accounts
- ✓ Retirement accounts (401k, IRA)
- ✓ Down payment source documentation
- ✓ Large deposit explanations
- ✓ Gift letter (if applicable)
Standard Mortgage Documents
- ✓ Government-issued photo ID
- ✓ Social Security card
- ✓ Credit authorization
- ✓ Purchase contract (if applicable)
- ✓ Property appraisal
- ✓ Homeowners insurance quote
How Lenders Calculate Income from Bank Statements
Income Calculation Methods
Method 1: Personal Bank Statements (Most Common)
Lenders analyze deposits into personal accounts after business expenses.
Calculation Example:
Total deposits over 12 months: $180,000
÷ 12 months = $15,000/month
× 50% expense factor = $7,500/month qualifying income
*Expense factor varies (typically 25-50%)
Method 2: Business Bank Statements
For business accounts, lenders deduct business expenses.
Calculation Example:
Total business deposits: $360,000/year
Minus business expenses: -$180,000
Net income: $180,000/year = $15,000/month
Important: Lenders use conservative calculations. Actual qualifying income may be 50-75% of your actual cashflow.
Property Types Allowed
Primary Residence
Best rates and terms
Minimum 10% down
Second Home
Slightly higher rates
Minimum 15% down
Investment Property
Higher rates and down payment
Minimum 20% down
Single-family, condos, townhomes, 2-4 unit properties typically eligible
Who Should NOT Use Stated Income Loans
Not Ideal For:
- • W-2 employees with straightforward income
- • Borrowers who qualify conventionally
- • New businesses (under 2 years)
- • Borrowers with poor cash management
- • Limited reserves or down payment
- • Credit scores below 650
- • Irregular/inconsistent income
Better Alternatives:
- • Conventional loans for W-2 employees
- • FHA loans for lower down payment
- • Traditional self-employed documentation with 2 years tax returns
- • Wait until business is established (2+ years)
- • Asset-based loans if you have significant assets
See If You Qualify for Stated Income Financing
Get a personalized assessment of your eligibility for bank statement loans in Arizona.