How mortgage lenders review your bank statements

Quick insights

Your bank statements can tell a story of your money and budget over one or more months. This information helps lenders review bank statements when considering loan applications. For mortgage preapproval and loan applications, lenders generally look for predictability, like steady deposits and healthy balance trends. They also note any patterns and details that need more clarity. 

Knowing what mortgage lenders look for on your bank statements can help you prepare for the homebuying process. In this article, we’ll break down what is commonly reviewed, why lenders ask for bank statements and how to have yours ready.

Why do mortgage lenders review bank statements?

Mortgage lenders normally want to review someone’s financial information in detail before approving them for a home loan. Your banking activity can indicate how you would put money down on a house and repay a mortgage loan. For example, your savings account statement could show the money you have available for the home purchase. However, lenders assess how ready someone is for a mortgage in order to lower the risk of lending the money. Lenders typically review a borrower’s income or assets, employment, credit history and monthly obligations (bills). Your bank statements serve a critical role in that review. 

What do mortgage lenders look for on bank statements?

Mortgage lenders review your bank statements to verify your income, cash reserves and any transactions that may need additional documentation. The exact documents and information required will depend on the lender, loan program and your unique financial situation. 

Here are several things a lender may look to understand when reviewing your bank statements.

How you’ll pay for your down payment and closing costs

Your bank statements could verify that you have enough money to cover your down payment and closing costs. These are specific costs due when you settle a mortgage loan. Meanwhile, depending on the mortgage and your circumstances, a lender may also consider additional assets or financial reserves. Having money left over after paying the upfront costs can give a lender confidence in your ability to repay the loan. 

Your income and recurring deposits

Bank statements may also provide information about money regularly entering your accounts. However, seeing a deposit doesn’t automatically mean a lender will treat it as qualifying income. The lender may use other documentation to verify the income being used to qualify for the mortgage (paystubs, W-2s, tax documents or other records). Certain transactions may cause the lender to reach out for more information or additional documentation.

Large or unusual deposits

Large or unexpected deposits may require documentation showing where the money came from, especially if those funds will be used to buy a home. Let's say you transferred money from another account, received eligible gift funds or sold an asset. Your lender may request documentation that helps establish the source of the funds.

Transfers between accounts

Looking at transfers in detail can help a lender verify the sources of money and any assets, particularly if they’re included on your mortgage application. For example, if you transfer part of your down payment from savings into checking shortly before closing, the statements from both bank accounts may show the lender exactly what happened. 

Self-employment income

If you’re self-employed, lenders may request additional bank statements, tax returns or business records to verify your income and overall financial picture. Bank statements alone may not give the lender a full picture or verification of what they’re looking for. 

Additional documentation can help the lender verify your income, assets and overall financial situation. Providing complete, requested records may help the review proceed more efficiently but doesn’t guarantee approval.

What about bank statements if you’re self-employed?

If you’re self-employed, a lender may request additional documentation to verify your income and assets. This could include bank statements, tax returns or business records, depending on the lender, loan program and your financial situation. Keeping your personal and business financial records organized can help you prepare for the mortgage application process.

Flags on bank statements during the mortgage process

Some activity may prompt the lender to ask for additional information or documentation. This can be a common part of the process. A few examples:

Activity that might be flagged doesn’t automatically disqualify you for a mortgage loan. If an underwriter asks about something on your bank statement, you may just need to provide supporting records or an explanation. Follow-ups like this can be common. 

Mortgage approval criteria and the required documents for your application vary by lender, loan program and individual circumstances.

How far back do mortgage lenders look at bank statements?

Many lenders request recent bank statements (often around two months) when you apply for a mortgage. This is to verify you have the assets and money needed for a down payment and closing costs. Depending on the loan program and your situation, a lender may request additional documentation or statements from a different period.

Requesting two months of bank statements may be common but isn’t universal. Some lenders or loan programs may ask for a different period or additional statements, especially if they need to verify certain transactions. 

Do mortgage lenders look at your spending habits?

Mortgage lenders typically aren’t reviewing bank statements to judge individual everyday purchases. Instead, they focus on financial information relevant to your mortgage application, including your income, assets and debt obligations. Lenders also calculate your DTI ratio, which compares your monthly debt payments with your gross monthly income. This figure can show how a mortgage payment may fit into your budget for repaying debts.

When do lenders review bank statements?

The level of financial verification may change as you move from exploring mortgage options to submitting a full application.

Mortgage prequalification

Mortgage prequalification can provide an early estimate of how much you may be able to borrow based on financial information you provide. The process and level of verification can vary by mortgage provider. Chase does not offer mortgage prequalification.

Mortgage preapproval

A mortgage preapproval generally involves a more detailed evaluation of your finances. A lender may review information related to your income, assets, debts and credit to determine how much it may be willing to lend, subject to applicable conditions.

Mortgage application and underwriting

When you have found a home and moved further into the mortgage process, your financial information may be reviewed in detail. Even if you’ve gotten preapproval or prequalification, don’t be surprised if your lender asks for updated bank statements or financial information. Homebuying and home loan applications can take time. Lenders may need the most current bank statements or other records before the loan moves toward settlement.

How to prepare your bank statements

Getting organized before applying for a mortgage may make it easier to respond to documentation requests.

In summary

Bank statements can help mortgage lenders verify your income, assets and funds for a down payment and closing costs when you’re buying a home. Preparing your financial documents ahead of time and keeping records of large deposits or transfers may help you navigate the mortgage process.

As you prepare for homeownership, you can also use the Chase mortgage calculator to estimate your monthly mortgage payment. See how factors such as your home price, down payment and interest rate may affect your costs, or discuss your situation and goals with a home lending expert.