NOT ALL LENDERS DO BANK STATEMENT LOANS!
Advisors Mortgage is a full-service lender who does non-QM loans such as bank statement mortgages and offers many other loan products. Not all lenders offer bank statement loans as they come with considerable risk to the lender and the borrower. A bank statement loan is a non-QM, non-qualified mortgage which is not backed by Fannie Mae or Freddie Mac, and borrowers and lenders are less protected. Search online or get referrals from friends or business associates for lenders who do these types of loans and have experience in doing them-- like Advisors Mortgage, a full-service mortgage banker.
WHAT ARE BANK STATEMENT LOANS?
Bank statement loans are one of many non-QM loans (non-qualified mortgages) which are the opposite of a qualified mortgage where tax returns, paystubs, and W2's are required to verify your income. Bank statement loans can be used to purchase a single-family home, condo, or townhome and can be used for second homes, vacation homes, or investment properties, or to refinance. You need to show consistent work or business history (at least 2 years). However, seasonal workers can still qualify. It all depends on the criteria of the lender. If in business, you would need to produce a copy of your business license. Bank statement loans can be done for rate and term, meaning to lower your interest, or to take cash out in a refinance transaction.
Lenders must verify your ability to repay the loan, and bank statements are one way in which this is done. Borrowers who do not have W2's, i.e., realtors, business owners, restaurant owners, and independent contractors and workers (must have valid business license) utilize bank statements for this non-QM (non qualified mortgage) loan.
WHAT TYPES OF BORROWERS WOULD AVAIL THEMSELVES OF A BANK STATEMENT LOAN?
- Independent contractors
- Sole proprietors
- Realtors
- Entrepreneurs
- Business owners
- Freelance employees
- Consultants
- Contract workers
- Seasonal workers
- And others!
EXAMPLE OF A BORROWER WHO WOULD UTILIZE A BANK STATEMENT LOAN:
Your income for 2022 was $200,000 but you actually made $300,000 because you deducted equipment you purchased. In such a case, your bank statements show what you actually made in 2022.
WHAT LENDERS LOOK FOR;
Negative balances are a signal to lenders that you are having issues managing your income. Overdrafts are viewed negatively by lenders, so if you want to be approved, keep very few overdraft fees. Deposits should be consistent. Large deposits will trigger questions by the lender; you will be asked to explain large deposits.