What expense factor do bank statement lenders use?
On business bank statements, lenders commonly apply an expense factor set by business type: about 15% for a service or consulting business, 30% for a small business and 50% for a larger operation with staff or inventory. Many accept a ratio from your CPA or tax preparer instead, with at least one current program setting a 10% minimum. Terms vary by lender.
Expense factors by business type
| Category | Common factor | Typical profile |
|---|---|---|
| Service or consulting business | About 15% | Low overhead, few or no employees, no inventory, for example a consultant, designer or solo professional |
| Small business | About 30% | Some overhead, a small team, modest equipment or supplies |
| Larger business | About 50% | Payroll, inventory, equipment or materials, for example a contractor, restaurant or retail store |
| CPA or tax-preparer ratio | Your documented ratio (a 10% floor at some programs) | A letter stating the business’s actual expense ratio |
The lender decides which category fits, based on the business, its size and what the statements show. The labels and percentages above are the common pattern, not every lender’s rule. A third-party-prepared P&L is another path some lenders accept, and a P&L-only program is a separate option.
Worked example: same deposits, four expense methods
A sole owner averages $25,000 a month of eligible business deposits. Here is how each method changes qualifying income and the 50% DTI ceiling.
| Method | Calculation | Monthly income | Max debt at 50% DTI |
|---|---|---|---|
| 15% (service) | $25,000 × 85% | $21,250 | $10,625 |
| 30% (small business) | $25,000 × 70% | $17,500 | $8,750 |
| 50% (larger business) | $25,000 × 50% | $12,500 | $6,250 |
| CPA ratio of 22% | $25,000 × 78% | $19,500 | $9,750 |
Moving from the 50% category to the 30% category adds $5,000 a month of qualifying income and $2,500 of room for monthly debt. That is why it is worth asking every lender, before you apply, which category they will put your business in.
When a CPA or tax-preparer ratio helps
A CPA or tax-preparer letter states the business’s actual expenses as a percentage of revenue. It helps when your real expenses are lower than the category the lender would otherwise assign, for example a contractor who subcontracts most work and carries little payroll. Lenders commonly require the preparer to be licensed or credentialed, may verify the preparer independently, and expect the ratio to be consistent with what the statements show. A letter that conflicts with your deposits or tax history invites more questions, not fewer.
Ownership percentage
If you own part of the business, many lenders count only your share of the income from business statements.
| Monthly eligible deposits | $25,000 |
| After 30% expense factor: $25,000 × 70% | $17,500 |
| Your 50% ownership share: $17,500 × 50% | $8,750 |
Document your ownership with an operating agreement, CPA letter or similar. Co-owners who are also borrowers can sometimes combine their shares; ask the lender.
Personal statements usually skip the factor
When you qualify on personal statements, lenders commonly count 100% of eligible deposits, because the business paid its expenses from a separate account before transferring money to you. They often ask for about 2 recent months of business statements to confirm the accounts really are separate. If business and personal money is mixed in one account, expect the lender to treat it as a business account with a factor. See which deposits count and 12 vs 24 months for the other levers.
Not sure which category your business falls into?
Tell LoanFight what your business does, your average deposits and whether you have a CPA. We review the scenario and connect you with a lending partner whose expense method fits.
Tell Us About Your Deal →Expense factor: frequently asked questions
What is an expense factor on a bank statement loan?
It is the percentage of business deposits a lender assumes went to business expenses. The lender subtracts it from your average deposits to estimate the income you actually take home.
Is 50% the standard expense factor?
No single standard exists. Many lenders use about 15% for service or consulting businesses, 30% for small businesses and 50% for larger operations with staff or inventory. It varies by lender.
Can my CPA lower my expense factor?
Often, yes. Many lenders accept a CPA or tax-preparer letter stating the business’s actual expense ratio, subject to verification and, at some programs, a 10% minimum.
Does the expense factor apply to personal bank statements?
Usually not. Personal-statement files commonly count 100% of eligible deposits, with a couple of months of business statements to confirm the accounts are separate.
How does ownership percentage affect income?
Many lenders count only your share. A 50% owner of a business with $17,500 of monthly income after expenses would qualify on $8,750.
Get your expense factor right before you apply
Share your business type, deposits and ownership. LoanFight reviews the scenario and then connects you with an appropriate lending partner.
Tell Us About Your Deal →Sources and review notes
Ability-to-Repay and income verification for owner-occupied loans: CFPB, Regulation Z, 12 CFR 1026.43 and its official interpretation (financial-institution records as third-party income records). Ranges describe commonly published non-QM self-employed lending terms as of October 2026; they are not any single lender’s guidelines and not a LoanFight quote. All arithmetic was checked line by line.
Educational information only, not an offer, approval or financial, tax or legal advice. LoanFight is not a direct lender and does not set final loan terms. Equal Housing Opportunity.