What Does This Calculator Do?
Many self-employed borrowers and business owners have a challenge: their tax returns show lower income because they've taken every legitimate business deduction they're entitled to. That's smart tax planning — but it can make it harder to qualify for a conventional mortgage, which requires lenders to use the income shown on your tax returns.
This calculator compares two loan options side by side, and shows you the full financial picture — including the income tax impact of each choice.
Conventional Loan (Tax Return)
Uses the current Freddie Mac average rate. You must document income through tax returns, which may require you to give up deductions to show enough qualifying income. The calculator shows how much income you'd need to report — and what that costs you in taxes.
Bank Statement Loan (No Tax Returns)
Qualifies you using 12–24 months of bank deposits instead of tax returns. You keep all your legitimate deductions. The rate is slightly higher — but for many borrowers, the income tax savings far outweigh the higher payment. The calculator does that math for you.
How To Use This Calculator
Enter the purchase price and your planned down payment. A 20% or greater down payment qualifies for a lower rate premium on the bank statement loan.
Review monthly expenses. Property tax and insurance are pre-estimated — override them with your actual figures if you know them.
Add any monthly debts such as car payments, student loans, or credit card minimums. These affect how much income you need to qualify.
Select your tax profile. Choose your filing status and employment type. The calculator auto-selects your 2025 tax bracket based on your qualifying income.
Enter your estimated taxable income — what you'd actually report on taxes after taking your deductions. This unlocks the full tax savings comparison.
Click Calculate to see your full side-by-side comparison, including monthly payments, qualifying income required, and potential tax savings.
Property & Loan Details
Monthly Expenses
Tax Profile
Conventional Loan
Qualifying Income Analysis
Payment Savings vs. Bank Statement Loan
Bank Statement Loan
Qualifying Income Analysis
Potential Income Tax Savings — Bank Statement Loan
(Higher rate → more interest paid → larger deduction) —
Important Disclosures & Assumptions
- Credit Score: All rates and calculations on this page are based on a borrower credit score of 780 or higher. Borrowers with lower credit scores will typically receive higher interest rates, which will affect all payment and income figures shown.
- Down Payment & Rate Premium: The bank statement loan rate premium applied is +0.50% above the Freddie Mac weekly average for borrowers putting 20% or more down, and +1.75% for borrowers putting less than 20% down. Actual premiums vary by lender, loan program, and borrower profile.
- Interest Rate Source: The conventional loan rate is based on the Freddie Mac Primary Mortgage Market Survey (PMMS) weekly average for a 30-year fixed-rate mortgage. Rates change weekly and are not guaranteed. The rate shown reflects the most recently published survey and may not be the rate available to any specific borrower.
- Qualifying Income (45% DTI): Monthly income requirements are calculated using a 45% debt-to-income (DTI) ratio — meaning total monthly debt obligations (mortgage payment, taxes, insurance, and other debts) should not exceed 45% of gross monthly income. Actual DTI limits vary by loan program and lender.
- Property Tax Estimate: The default property tax estimate uses 2.2% of the purchase price annually, divided by 12. Actual property taxes vary significantly by location and assessed value. Always verify with your local tax authority or a real estate professional.
- Insurance Estimate: The default homeowner's insurance estimate uses 0.95% of the purchase price annually, divided by 12. Actual insurance premiums depend on property location, coverage type, carrier, and other factors.
- Tax Rates: Tax rates shown are based on 2025 U.S. federal income tax brackets. Self-employed combined rates include the employer and employee portions of self-employment (FICA) tax based on 2025 Social Security wage bases. State income taxes are not included. Actual tax liability depends on your complete financial picture, deductions, credits, and applicable state and local taxes.
- Mortgage Interest Deduction: The additional interest deduction benefit is an approximation based on the first-month interest differential, annualized. The actual deductible amount depends on loan balance, filing status, itemization of deductions, and IRS limits. Consult a tax professional before making decisions based on this estimate.
- Not a Commitment to Lend: This calculator is for illustrative and educational purposes only. It does not constitute a loan application, pre-approval, pre-qualification, or commitment to lend. All loan applications are subject to underwriting approval, credit review, income verification, property appraisal, and all applicable federal, state, and lender guidelines.
This tool is intended to help borrowers understand the general financial comparison between loan options. Individual results will vary. Consult a licensed mortgage professional for personalized advice, and a licensed tax professional for guidance on your specific tax situation. Equal Housing Opportunity.
Enter your information above and click Calculate to see your comparison.
