First Steps

Mortgage Bank Statements: Why Lenders Need Them and What They Look For

Published on: June 28, 2022

bank statement for mortgage loan

When applying for a home loan, your lender may request mortgage bank statements. This refers to your personal bank account statements, which can help a lender determine your ability to repay your home loan.

You’ll need to access bank statements from your financial institution and provide them with your mortgage application to be approved for a mortgage. Understanding what lenders check for in mortgage bank statements and how this piece of financial information is used will prepare you for the mortgage application process.

What is a mortgage bank statement?

A bank statement is a written record of the activity in your checking, savings, money market, or other similar accounts. If you have one of these accounts, your bank or credit union issues bank statements regularly — monthly or quarterly — either electronically or via mail. Each statement provides a summary of the account and details of each deposit, withdrawal, and fee that cleared your account during the statement period. 

During the mortgage application process, lenders request bank statements for loan approval, so they’re sometimes referred to as mortgage bank statements.

Why do lenders check bank statements before approving a loan?

Before approving you for a loan, lenders need to confirm you can afford the mortgage you’re applying for. Specifically, they want to ensure you have funds for the down payment and closing costs, enough recurring income to support the mortgage payment, and cash reserves on hand if you encounter temporary difficulty paying the loan. 

To assess your ability to repay the loan, your lender will ask you about your income and expenses on the mortgage application. They will also request multiple documents as part of your loan application packet. While some of the documents, like your pay stubs and tax returns, serve as proof of income, bank statements further verify the information you gave in your application and provide deeper insight into your financial situation. 

Bank statements for mortgage approval can also reveal details of your finances you didn’t disclose, such as additional income sources or loan payments. During the process of approving a mortgage, bank statements can directly affect the loan approval.

What lenders look for in a bank statement for a mortgage

Lenders will thoroughly review the information in your bank statements for each of your accounts to ensure you can support the loan. 

Specifically, lenders look at the following:

  • Recurring income: Your lender will review the source and regularity of your deposits to confirm you have a stable and reliable income.
  • Recurring expenses: Your lender will assess your withdrawals to verify your debt payments and regular expenses.  
  • Funds for closing costs and down payment: Your lender will determine whether you have money available for the down payment and closing costs. They will also look to verify the money is yours or from an approved source. 
  • Cash reserves: Depending on the type of loan you’re applying for, you may need to have several months’ worth of your mortgage payment saved up. The bank will want to confirm you have this money on hand. 

Red flags in mortgage bank statements

Your lender will also be on the lookout for any indication you won’t be able to pay the mortgage or for details of your finances you did not disclose. The following red flags may prompt your lender to request further information from you or, in some instances, could lead to a loan denial.

  • Bounced checks: Multiple bounced checks and insufficient funds fees can indicate that you’re overextended financially and won’t be able to afford the loan payment.
  • Irregular or non-wage income: If you have irregular or non-wage income, such as child support, your lender will want to confirm the source and regularity. You may need to provide additional documentation.
  • Recent large deposits: If you have recent sizable deposits into your bank accounts, your lender will want to verify the source. In the case of gift funds, if your loan type allows it, your bank or mortgage company will confirm the money is a gift rather than a loan you’ll need to repay. 
  • Undisclosed payments: If you have recurring withdrawals that differ from the expense details you provided, your lender will want to make sure you don’t have a loan or other financial obligations you haven’t revealed.

How many bank statements for a mortgage do you need to provide?

Typically, lenders request 60 days’ worth of bank account history. So, if you receive monthly statements, expect to provide the two most recent bank statements with the other documents your lender requests. If you receive quarterly statements, you’ll need to provide the statement for the most recent quarter. 

While one bank statement may confirm your monthly income and expenses, lenders want to see at least two months of account records to better assess your financial situation. If you’re applying for a refinance loan, your lender may only request one month of activity.

How to get a mortgage bank statement

To satisfy your lender’s bank statement loan requirements, you’ll need to provide your most recent account statements. If you don’t receive them in the mail, take the following steps to access your bank statements online:

  1. Log into your bank account. Go to your bank’s website and sign in to your account. If you don’t already have online access, you’ll need to follow your bank’s process for creating an online account.
  2. Navigate to your account statements. Once you’ve logged in to your account, you may see a “Statements” or “Documents” tab. Or, you may find your statements in another section such as “Account Details” or “Account Information.”   
  3. Find the most recent statements. Your bank statements will be separated by statement dates. Navigate to the statement(s) for the two most recent months or the most recent quarter.
  4. Download the statements. You’ll be able to view, print, and download your bank statements. When downloading, you may wish to rename the statements to identify them clearly in the future. 

You’ll need to follow the above steps for each bank account. Although if you have a checking and savings account at the same institution, both accounts may be on one statement.

Requesting bank statements for home loans: Things to consider

After meeting your lender’s bank statement loan requirement, keep a couple of things in mind. First, your lender may request further information from you, and in some cases, they may verify the information in your bank statements directly with your financial institution. 

Secondly, if more than 45 days have passed between applying for the loan and supplying your bank statements or your loan is taking a long time to close, your lender may ask for your most recent statements again. 

Would you like to learn more about applying for a home loan and mortgage bank statement requirements? Speak to a local Finance of America Mortgage Advisor today.

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