Co-Mingled Bank Statements: When the Personal Account Is Also the Business Account

This is general information for education only. It isn't lending, underwriting, credit, legal or tax advice. Program rules vary by lender and change over time; check your lender's current guide. You and the lender make every lending decision.

Plenty of self-employed borrowers never opened a separate business account. Client payments, personal paychecks, a spouse's deposits and grocery runs all go through one checking account. That's a co-mingled account, and it changes how you build the worksheet.

First question: personal or business treatment?

Many bank-statement programs have separate rules for personal and business statements, and a lender will typically review a co-mingled account under one of them.

• Personal-statement treatment typically uses the deposits your lender will count, without a business expense factor, but the lender may want proof that business expenses are paid elsewhere, or may ask for business statements too.
• Business-statement treatment typically applies an expense factor (or a P&L or CPA-supported factor) to the deposits your lender will count.

Which one applies, and what proof the lender wants, is a program decision. Ask before you build anything; the same statements can produce very different income.

Separate the deposits

Whichever treatment applies, not every deposit in a co-mingled account is self-employment income.

1. Tag business receipts. Client payments, merchant settlements, payment-app transfers from customers.
2. Tag non-business income. A W-2 paycheck, a spouse's or co-borrower's deposits, benefits. These may be counted another way or not at all.
3. Tag non-income credits. Transfers from the borrower's own accounts, refunds, loan or credit-line advances, returned items.
4. Note anything you can't identify for a letter of explanation instead of guessing.

Watch for business expenses in the same account

If business expenses run through the account, the lender may treat it more like a business account. Large recurring payments to suppliers, payroll services or equipment lenders are worth flagging early.

Document your work

Write down each exclusion (date, amount, description, reason) and keep the same rules every month. Clear tags make your work easier for the underwriter to follow.

Using StatementReady for this step

StatementReady builds the 12- or 24-month worksheet from the statements you upload, using the ownership percentage and expense factor you enter on the loan file, and checks each statement to the cent against its printed balances. In StatementReady, ownership % is applied to business-statement runs. For personal-statement runs it's off by default, and you can turn it on in your settings if your program applies it. You review every result, including which deposits count. Configured by you from your saved settings — not a lender determination. Confirm the current guideline with the lender before you rely on it.

StatementReady assists your review, and you check every result. It doesn't make lending, credit or underwriting decisions, and it doesn't replace your judgment or your lender's guidelines.

NFCU checked on real files; other US banks and credit unions are accepted, checked to the cent, and marked Unverified if a statement doesn't reconcile or can't be checked.

Get started → statementready.net — Your first 2 loans are on us.

FAQ

Can a borrower qualify with only a personal account?

Many programs allow personal statements. Whether a co-mingled account qualifies, and with what extra proof, depends on the program.

Should the borrower open a business account now?

That's their call and their accountant's. A brand-new account won't have the history the look-back needs, so the existing statements still matter.

Do the co-borrower's deposits count?

They may count as that person's income if documented under the program's rules. Don't fold them into self-employment income.

Related guides

• Business vs Personal Bank Statements
• Excluding Transfers, Refunds and Other Non-Income Deposits
• Expense Factor on Bank Statement Loans

Sources

No external sources are cited. This article describes general practice; program rules vary by lender, so check the current guide for the loan you're working on.

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