Guides / Programs
Stated Income Loan vs Bank Statement Loan
Nov 4, 2026 · Varaxon Technologies LLC d/b/a StatementReady
This is educational, not underwriting, legal or tax advice. Lenders set their own guidelines; confirm with the lender. Not legal or tax advice.
Self-employed borrowers still ask for a "stated income loan." What they want is a way to get a mortgage without tax returns that show the income they earn. What exists in published programs today is closer to a bank statement loan, and the difference matters for how you build the loan file.
The two terms
Stated income means income the borrower states on the application, with the lender relying on that statement instead of records.
Bank statement loan means the lender reviews the borrower's bank statements as the income records, then works out a figure from the deposits under its own program method. The live StatementReady FAQ describes it as a mortgage that "documents a self-employed borrower's income using deposits on personal or business bank statements instead of tax returns." [3]
What the federal rule says about verifying income
For consumer mortgages that are "covered transactions" under Regulation Z, the ability-to-repay rule says: "A creditor shall not make a loan that is a covered transaction unless the creditor makes a reasonable and good faith determination at or before consummation that the consumer will have a reasonable ability to repay the loan according to its terms." [1]
On income, 12 CFR 1026.43(c)(4) says the creditor "must verify the amounts of income or assets that the creditor relies on … using third-party records that provide reasonably reliable evidence of the consumer's income or assets." Its examples of such records include tax returns, W-2s, payroll statements and "Financial institution records." [1]
So bank statements appear in the rule's own list of example records. A borrower's statement alone does not. Which transactions the rule covers, and its exceptions, is a legal question for the lender and its counsel. Not legal or tax advice.
Side by side
| Stated income (older sense) | Bank statement loan | |
|---|---|---|
| Income comes from | What the borrower writes on the application | Deposits on 12 or 24 months of statements, per program [2] |
| Records in the file | Little or none for income | The statements, plus what the program asks for (business proof, expense letter or P&L) [3] |
| Expenses | Not separated | Expense factor, CPA/preparer statement or P&L, per program |
| What the broker checks | — | Missing months, balances, transfers, large deposits, NSFs |
What to tell the borrower who asks for "stated income"
- Explain that the lender will read the statements as income records, so every month, every page and every account in the window matters.
- Ask early which accounts the business runs through, and whether personal and business money are mixed. See co-mingled statements.
- Ask about large or unusual deposits now, so an explanation is ready. See how to source large deposits.
- Set expectations that the figure is deposits after the program's expense method, not gross deposits. See explaining bank statement income to borrowers.
How the broker documents the file
None of these is a lender requirement; they are checks on the documents you hold:
- Confirm statement periods cover the window with no gaps.
- Check whether each statement's transactions add up to its printed balances.
- Mark transfers between the borrower's own accounts and refunds so they aren't counted as income.
- List deposits above the size the lender flags, for an explanation letter. See the letter of explanation guide.
- Write short submission notes so the underwriter sees what you checked.
FAQ
Are stated income loans still offered?
We can't point to a public source that answers this for every lender, so we won't guess. What the federal rule says for covered consumer transactions is quoted above. [1] Ask the lender what its program documents.
Is a bank statement loan a stated income loan?
No. The bank statements are the income records the lender reviews. See what is a bank statement loan.
Do bank statement loans need tax returns?
Programs like Arch's list bank statements as an alternative income documentation option to tax returns. [2] Other documents may still be asked for. Confirm with the lender.
Does StatementReady verify income for the lender?
No. It helps you review the statements before submitting. The lender makes the income and credit decision.
Sources (checked 2026-11-04)
Product statements are quoted from the live StatementReady FAQ on the date checked. These documents may change; confirm the current version with the lender.
- eCFR, 12 CFR 1026.43(c)(1) and (c)(4) (current text as fetched Nov 4, 2026): "(1) General requirement. A creditor shall not make a loan that is a covered transaction unless the creditor makes a reasonable and good faith determination at or before consummation that the consumer will have a reasonable ability to repay the loan according to its terms." and "A creditor must verify the amounts of income or assets that the creditor relies on … using third-party records that provide reasonably reliable evidence of the consumer's income or assets." Examples include "(iv) Financial institution records". https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-E/section-1026.43
- Arch Mortgage Funding, Inc., Non-QM Quick Reference (PDF, © 2026; version online when checked Nov 4, 2026): "The full documentation options include 1 or 2 years' tax returns and/or 1 or 2 years' W-2s. The alternative income documentation options include Bank Statement: 12 or 24 months' personal or business bank statements (minimum self-employed business ownership of 25%)…" https://mortgage.archgroup.com/wp-content/uploads/sites/4/MCUS-B1531AMF-26A-Non-QM-Program-QR.pdf
- StatementReady FAQ: https://statementready.net/faq
Related guides
- What is a bank statement loan?
- Bank statement vs 1099 vs P&L loans
- Bank statement loan documentation checklist
For shorter answers, see the StatementReady FAQ.
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