WHAT IS A BANK STATEMENT LOAN?
Are you self employed? Consider a bank statement loan ~
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.
qualifying for bank statement loans
- Your income statements are made up of regular monthly income deposits.
- The lender can look at 12 or 24-month bank statements. the lender does not need to look at your tax returns.
- If you own a business, you can show 24 months of business statements and a P&L statement (profit and loss) prepared by a CPA/Certified Public Accountant for the same period. BUT note, not every business owner is required to present a P&L.
- Bank statement home purchases often require only 10 percent down, but it all depends on your credit score and other factors.
- For cash out refi's, you can actually get 85 percent of the value of your property
- Max loan amount is $5 million.
- Some lenders will accept a DTI/debt to income ratio max of 55 percent.
- 3 options: fixed, adjustable, or interest-only
- 100% gift funds allowed.
THE DOWNSIDE OF BANK STATEMENT LOANS:
-Higher Interest Rates Depending on Credit Score
-620 is acceptable but 700 gets you a better interest rate.
-If your credit score is lower, you might need a larger down payment on a purchase.
-Speak with your loan officer and get all the details before making your decision!
Find out more!
Contact Advisors mortgage to learn how to obtain a non-QM loan, a bank statement loan.
Got Questions? Advisors Mortgage Group - 888-843-9797 or direct 631-804-9044
Contact Advisors Mortgage: 631-804-9044 or 888-843-9797
