South Dakota Bank Statement Loans: Helping Self-Employed Borrowers in Rural Markets

The Self-Employed Borrower’s Dilemma in South Dakota In South Dakota, where entrepreneurship and self-employment are woven into the fabric of rural life, traditional mortgage requirements often fail to serve the financial realities of local borrowers. Farmers, ranchers, truckers, contractors, and small business owners make up a significant share of the economy—but they rarely meet the W-2 income verification standards required for conventional loans. The result? A financing gap that leaves many high-potential homeowners or refinancers sidelined.

This disconnect is especially pronounced in smaller communities across the state, such as Winner, Chamberlain, or Belle Fourche, where the economy relies on seasonal income and variable monthly cash flow. Traditional underwriting fails to recognize the financial health of borrowers who don’t have standard pay stubs but maintain steady revenue via personal or business bank accounts.

What Are Bank Statement Loans? Bank Statement Loans are a form of Non QM Loans that allow borrowers to qualify using deposits shown on their personal or business bank statements, instead of tax returns or pay stubs. Lenders like NQM Funding offer flexible documentation options that better reflect the true income of self-employed individuals.

Instead of requiring full income documentation, these loans assess average monthly deposits across a set period—12 or 24 months, or even just 2 months in some cases. Borrowers can use either personal or business statements, depending on their structure. This method offers a fair and transparent path to financing, especially for rural borrowers whose income fluctuates seasonally.

Why Bank Statement Loans Fit South Dakota’s Rural Economy South Dakota’s economy is heavily dependent on agriculture, energy, hospitality, and independent trades—industries where income tends to be project-based or seasonal. That means conventional underwriting often penalizes otherwise financially sound borrowers. From the Black Hills to the Missouri River Valley, many residents have high cash flow and asset reserves but inconsistent year-over-year taxable income.

Bank Statement Loans help solve this problem by focusing on cash flow. For borrowers in counties like Meade, Lawrence, or Hutchinson, this form of loan opens doors that traditional lending leaves shut. Because these loans do not rely on tax return income, they avoid the deductions that self-employed borrowers often take for tax benefits, giving a more accurate picture of true earning capacity.

Flexible Bank Statement Loan Programs from NQM Funding At NQM Funding, Bank Statement Loan options include 12- and 24-month bank statement programs, as well as a P&L only option supported by a CPA or tax preparer. Some highlights include:

• LTV up to 90%

• Loan amounts from $125,000 to several million

• Credit scores down to 620

• No mortgage insurance required

• Fixed, ARM, and Interest-Only terms available

For more details, visit the Bank Statement Loan Program page.

Using Business vs. Personal Bank Statements Business bank statements typically require a 50% expense factor unless otherwise justified by a CPA. Personal statements can allow 100% of deposits to be considered income. In both cases, NQM Funding provides guidelines and calculators to help brokers determine qualifying income quickly and accurately.

Borrowers may also qualify using a CPA-prepared Profit & Loss Statement alone, reducing document gathering. This is especially useful for sole proprietors and rural entrepreneurs who don’t separate business and personal finances as cleanly as corporate entities.

How These Loans Serve Underserved Areas In many rural counties, access to traditional banking is limited. Local banks may not offer Non QM Loans or have rigid overlays that exclude self-employed borrowers. Bank Statement Loans offered through non-bank lenders like NQM Funding provide:

• Flexible qualifying methods

• Faster underwriting turnaround

• Broader credit tolerance

• No income tax return requirement

This is a game-changer for communities underserved by major financial institutions, giving families and individuals a real path to homeownership or refinancing.

Additional Scenarios Where Bank Statement Loans Help Farm Equipment Dealer in Aberdeen: A borrower who sells combines and tractors during spring and fall shows large deposits only during peak inventory turns. A 24-month average allows his true revenue to shine through.

Seasonal Tourism Guide in the Black Hills: Summer brings surges in income, while winter may be quiet. A 12-month bank statement reflects the pattern and provides a more realistic view than last year’s tax return.

Home-Based Business Owner in Mobridge: A rural-based home business with fluctuating monthly revenue qualifies using personal bank statements and a CPA letter outlining low operating expenses.

Loan Requirements and Highlights NQM Funding makes it easier for brokers and borrowers alike by keeping requirements practical:

• 2 years self-employment history

• At least 10% down

• Bank statements must be complete, consecutive, and reflect regular deposits

• Gift funds allowed up to 100% of down payment (with minimum borrower contribution in some scenarios)

• Available for primary, second homes, and investment properties

Other key requirements include:

• Maximum DTI ratio up to 50% depending on compensating factors

• Reserves may be required based on loan size and occupancy type

• 30-, 40-year fixed, and 5/6 ARM options with interest-only available

How Bank Statement Loans Compare to DSCR and Foreign National Options For investors, a DSCR loan may be more appropriate when purchasing rental properties based on cash flow alone. South Dakota has a growing investment property market, especially in university towns like Brookings and Vermillion.

Meanwhile, Foreign National Loans are ideal for international buyers looking to purchase in areas like the Black Hills, where short-term rentals and seasonal cabins attract foreign investors. South Dakota’s relatively low property taxes and affordability are increasingly attracting attention from abroad.

South Dakota Market Considerations for Loan Officers Loan officers and brokers working in South Dakota should pay attention to:

• The unique income structure of their self-employed clients

• Seasonal and cyclical revenue patterns in rural areas

• Property types ranging from manufactured homes to rural homesteads

• The competitive edge of fast, flexible lending over big banks

• Demand for homeownership and refinance in underserved tribal and agricultural communities

Bank Statement Loans allow you to stand out by saying “yes” when other lenders say “no.”

How Brokers Can Grow Their Business with Bank Statement Loans The opportunity to serve self-employed clients in South Dakota is vast:

• Partner with local CPAs to identify high-income, low-taxable-income borrowers

• Use NQM Funding’s Quick Quote tool to prequalify clients fast

• Target small towns and regional hubs like Huron, Mitchell, and Spearfish

• Develop educational content around Non QM Loan opportunities and distribute through local business associations and farm bureaus

• Educate borrowers on the difference between Non QM Loans and hard money lending to build trust

Meeting the Needs of Modern Borrowers in a Changing Economy The lending landscape is shifting. Rigid underwriting models are giving way to real-world income recognition. Bank Statement Loans are at the forefront of this shift, especially in rural states like South Dakota. For loan officers and brokers ready to adapt, there’s an entire market waiting to be served.

Bank Statement Loans provide real-world solutions to income documentation gaps and give local entrepreneurs a clear path to homeownership. By building relationships with borrowers often overlooked by traditional lenders, brokers can not only close more loans—they can make a meaningful impact in rural communities that are too often underserved.

To learn more or start your application, visit NQM Funding or access the Bank Statement Program overview.