Qualifying income comes from averaging eligible deposits over 12 or 24 months — then applying a personal deposit factor or business expense factor. Here is the math lenders use on Non-QM files.
Four steps from raw statements to monthly qualifying income.
Collect 12 or 24 consecutive months of personal or business statements — all pages, same account series.
Remove transfers, loans, gifts, and other non-revenue credits so only eligible deposits remain.
Total eligible deposits ÷ number of months = average monthly deposits.
Multiply by the personal deposit percentage or business expense factor (and ownership % when required).
Which factor you use depends on the account type — and it changes usable income.
Personal statements
Personal programs often count a high share of eligible deposits — sometimes 50–100% depending on the investor. Owner draws that land in personal checking can be the income event.
Business statements
Business programs typically assume operating costs via an expense factor (often ~50%) or accept a CPA letter. Ownership percentage adjusts the result on multi-owner entities.
Factors and expense assumptions vary by investor. We run both paths when your accounts support it.
NSF fees, unexplained large deposits, and gaps between statement periods force underwriters to exclude months or request letters of explanation — which can shrink average deposits.
Mixing personal spending through a business account (or vice versa) also creates noise. Cleaner accounts usually produce cleaner — and higher — qualifying income.
Before you write an offer, Ryan & Steve walk your deposit history so the calculated number supports the purchase price.
Quick example (illustrative)
Example only — your factor, lookback, and exclusions will differ by program.
Related bank statement guides and Non-QM resources from Ryan & Steve.
Expense factors, ownership docs, and multi-owner business accounts.
Personal deposit factors and owner-draw documentation.
12 vs. 24 month lookbacks that feed the income calc.
Full program hub with eligibility and documents.
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Lenders total eligible deposits over 12 or 24 consecutive months, divide by the number of months to get average monthly deposits, then apply a deposit percentage (personal) or expense factor (business). Ownership percentage may further adjust the result on entity files.
Transfers between your own accounts, loan proceeds, large one-time gifts or capital contributions, and other non-revenue credits are typically removed so income reflects business or self-employment cash flow — not recycled money.
On some business-statement programs, a CPA expense letter or P&L can support a lower expense ratio than the investor’s default factor — increasing usable income when your real margins are strong.
No. Conventional underwriting uses taxable income from returns and W-2s. Bank statement income follows deposits in the account, which often qualifies better when write-offs suppress AGI.
Ryan & Steve run the income calc on your actual statements — so you know what qualifies before you write an offer.