When mortgage bank statements are insufficient, borrowers should first verify documentation accuracy and request updated statements from their bank. If gaps persist, they should provide alternative proof of income, such as pay stubs, tax returns, or W-2 forms. Contacting the lender to negotiate acceptable documentation or discuss compensating factors like higher credit scores or larger down payments is critical. In some cases, a mortgage broker or attorney can help resolve discrepancies or secure letter of explanation. Lenders may also require additional reserves, such as 2-3 months of post-closing savings, to mitigate risk.

Lenders rely on bank statements to assess a borrower’s ability to repay loans. Inconsistent or incomplete statements can trigger underwriting delays or denials, as they may fail to demonstrate stable cash flow or liquidity. According to the Consumer Financial Protection Bureau (CFPB), 15% of mortgage applications in 2022 were denied due to documentation issues, with insufficient bank statements being a common factor. The Federal Housing Finance Agency (FHFA) reports that Fannie Mae’s 2023 guidelines mandate bank statements to reflect 90 days of transactions and a minimum of three months of reserves post-closing. Borrowers who fail to meet these standards face higher loan costs or rejection. For example, a 2023 Urban Institute study found that 30% of lenders require more than three months of reserves for riskier loans, compounding challenges for borrowers with thin financial histories. Proactive communication and professional guidance are essential to align documentation with lender expectations and optimize approval chances.