# NSF Fees on Bank Statements: How Lenders Count Them

- Author: TrueBankFlow (https://truebankflow.com)
- Published: 2026-10-16
- Category: What underwriters check
- Canonical: https://truebankflow.com/blog/nsf-fees-on-bank-statements

> How lenders count NSF fees on bank statements and overdrafts, the tolerance limits programs set, and what to do when the bank charged one in error.
Lenders count NSF fees on bank statements as events in the lookback period, and the guideline's wording decides whether several fees on one day count once or separately. Each program sets its own tolerance for those events. A borrower who stays under it is usually fine. Beyond it, expect a letter of explanation or a decline.

## How do lenders count NSF fees on bank statements?

An NSF fee is a charge for non-sufficient funds: the account lacked the money to pay an item, and the bank returned it or paid it anyway for a fee. Lenders count how many separate events occurred in the lookback, and they treat the dollar amount of the fee as secondary.

### Occurrence versus fee

The distinction matters because banks sometimes charge more than one fee for one event, and sometimes charge for several items on the same day. A guideline that counts occurrences might count three fees on the same day as one event or as three, depending on its wording. The rule in the lender's guideline decides. Read it for the phrases "per occurrence," "per item" and "per day."

### Reading the statement

Look for lines labelled NSF, returned item, insufficient funds, overdraft or OD. Banks use different words, and the fee often appears in the fee section of the statement, apart from the transaction that caused it. Add up events across all the accounts the lender reviews, not only the main one.

## Do overdrafts count the same as NSF fees in a statement review?

Usually not exactly. An overdraft happens when the bank pays an item despite a lack of funds and charges a fee. An NSF happens when the bank refuses to pay it. Both show the account ran short, so many guidelines count them together, while others count them separately or only count overdrafts that stayed negative for days.

### Why the reviewer cares

A returned payment may mean a late fee and a damaged relationship with the payee. A paid overdraft means the borrower used the bank's credit. Underwriters read both as a sign of thin cash management. An overdraft fee on a single day after a large legitimate payment is read more kindly than a pattern of small ones every month.

### Negative balances

Some programs look at days with a negative ending balance, not only the fees. A statement that shows several days below zero in one month tells the same story as several fees. The business side of this idea is covered in [negative days and NSF limits for merchant cash advances](/blog/merchant-cash-advance-underwriting#negative-days-and-nsf-limits-in-merchant-cash-advance-underwriting).

## NSF tolerance limits on bank statement programs

A tolerance limit is the number of NSF or overdraft events a program accepts in its lookback before it asks questions or declines. Limits vary by lender, so there is no standard number. A typical guideline states a count over a short window and a stricter one for the most recent months.

### A sample count

The table shows twelve months of fictional events and how one invented sample guideline counts them. The guideline here is an example, not a real lender's rule: no more than three events in twelve months and no more than one in the last three.

| Month | Events | Fees charged | Counts under the sample guideline |
| --- | --- | --- | --- |
| Jan | 0 | 0 | 0 |
| Feb | 1 | 35 | 1 |
| Mar | 0 | 0 | 0 |
| Apr | 0 | 0 | 0 |
| May | 2 on the same day | 70 | 1 (same day = one event) |
| Jun | 0 | 0 | 0 |
| Jul | 0 | 0 | 0 |
| Aug | 1 | 35 | 1 |
| Sep | 0 | 0 | 0 |
| Oct | 0 | 0 | 0 |
| Nov | 0 | 0 | 0 |
| Dec | 1 | 35 | 1 |

There were five fees totalling 175, but the sample guideline counts four events. That is over the limit of three for twelve months, and the December event is the one in the last three months. A fee-based count would reach a different answer than an occurrence-based count, which is why the wording matters.

### What brokers do with this

Ask the lender how it counts before you submit. Where a file is over, a written explanation tied to a one-off cause, such as a payroll delay or a large unexpected bill, helps. The wider question of which problems a letter fixes is in [bad bank statements on a mortgage](/blog/bad-bank-statements-mortgage), and the read of mixed personal and business activity is in [self employed bank statements](/blog/self-employed-bank-statements).

## When an NSF fee on a statement is a bank error

A bank can charge an NSF or overdraft fee in error, for example when a deposit was posted late or a hold was placed wrongly. If the borrower can show the error, the lender may accept an explanation with proof, and the fee may not be counted.

### How to prove it

1. Ask the bank for a written reversal or a corrected statement.
2. Get the bank's confirmation that the fee was refunded, shown as a credit on a later statement.
3. Write a short letter that gives the date, the amount and what happened.

A refund alone is a good sign, but the original charge stays on the earlier statement. Underwriters see both lines, so the letter should point to the refund.

TrueBankFlow flags NSF fees and overdrafts with their dates and statement lines, and lists NSF and overdraft events in its underwriting report, so counting does not rely on scanning every page by eye. Read [how the product works on the homepage](/) before you request a place on the early list.