If you are reading this now, then you may already be familiar with bank statement loans or you are self employed and you are looking for finance help. The good news is that in 2018 self employed borrowers now have a program that can help them to finance a new home, or refinance an existing home.
We will walk you through everything you need to know about bank statement loans and then connect you with a bank statement mortgage lender.
In the past, self employed borrowers were able to find stated income loans or no documentation loans easily. In fact, salaried borrowers were able to get them too. However, after the mortgage meltdown, the programs to help self employed borrowers disappeared. They now had to qualify on their net income referenced on the tax returns. When taking all of the legal tax deductions into consideration, there was little left in net income to qualify for a mortgage. Now, the bank statement loan is here and this is great news for self employed individuals.
Bank Statement Loan Program Basics
Basically… you are going to qualify based upon the 12-24 month bank deposits (depending upon the lender) into your personal and/or business accounts. The lenders want to see a consistent flow of money sufficient to qualify you for the bank statement mortgage.
How Do You Qualify?
You must be self employed – which means you have to prove it by providing a letter from your accountant verifying that you have been in business for at least two years. You may also have to provide a business license if applicable. A non-self employed co-borrower (someone with W2 earnings) may also be added to the loan as well as their income.
Down Payment – Some lenders may allow as little as 10% down but others will require 20% down. Sometimes, it is also determined by your credit score. If it drops below a particular threshold, then the lender may require a larger down payment.
Credit Scores – There are some bank statement lenders who offer programs for individuals with credit scores below 550 and maybe as low as a 500 FICO score. Keep in mind that your down payment requirement may increase and it is possible that your rate will as well. We suggest speaking with a bank statement lender to find out what your personal scenario is.
Bank Statement Requirements – Most lenders require you to supply 12-24 months’ worth of bank statements to use as income verification. For personal bank accounts, they use 100% of the average. For business accounts, they will use 50% of the average. They will usually combine them both.
- Personal Account – 24 months’ deposits totalling $150,000 Divided by 24 = $6,250 monthly income
- Business Account – 24 month’s deposits totalling $150,000 Divided by 24 = $6,250 but will use 50% or $3,125 monthly income
P&L Statements – It is possible that your lender may require you to provide a P&L statement that has been prepared by your accountant.
Assets – Your assets must be fully verified. This includes bank statements and any other assets that you would provide for a conventional loan. The more assets you can provide during the qualification process, the better chance you have to being approved for a bank statement loan.
Frequently Asked Questions
Do I have to be self employed? Yes, at least one borrower on the loan must be self employed for a minimum of two years.
Does the home have to be my primary residence? No, this can be a vacation home or an investment property too. Up to 4 unit properties and it can also be a condo.
What if I don’t have 24 month’s bank statements? We suggest going through the process with one of our lenders anyway. You may still be able to qualify if you have other compensating factors in your favor.
If I have a low credit score, should I bother to apply? Yes, there are lenders who will still work with you even with low credit scores.
What is the maximum DTI ratio (Debt to Equity) requirement? Some lenders will go up to a 50% DTI. So, fill out the form to have someone contact you to see whether you qualify.
What if I am retired? You may still qualify if you are receiving deposits.
Who are some of the lenders that offer bank statement loans? Some of the bank statement mortgage lenders include North Star Funding, Citadel Servicing, First National Bank of America, Mortgage Depot, Angel Oak Mortgage Solutions, and others. The list does vary and we are connected to the best bank statement lenders in the industry.
Still have questions? Contact us!
We are able to help you to find a bank statement loan with the best bank statement lenders in the following states: Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, Wyoming.