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Bank Statement Loans

What is a Bank Statement Loan?

Many people in the U.S. have trouble keeping their credit scores up. If you’ve gone through something like bankruptcy or not paying a debt on time, sometimes referred to as a Credit Event, it can really hurt your credit score. This can make it tough to get the loan you need to buy a house.

If you have recently hsomething recently happened that dropped your credit score, you might want to look into a special kind of loan. These loans are for people with lower credit scores to help them get a mortgage and buy a home. Our special loans for people with credit issues are easier to qualify for, so you can still aim to buy a home.

Who Can Benefit from a Bank Statement Loan? 

Bank Statement Mortgages can be particularly beneficial for several types of borrowers who may not qualify for traditional mortgages due to the nature of their income documentation. Here are the groups who can benefit most:

Self-Employed Professionals and Entrepreneurs: These individuals often have fluctuating income or write off a significant portion of their income on taxes, making it difficult to prove their true earnings through traditional W-2 forms. Bank Statement Mortgages allow them to use bank statements to demonstrate their cash flow and income stability.

Freelancers and Independent Contractors: Similar to self-employed professionals, freelancers and contractors might not have a steady paycheck but can show consistent income through their bank statements.

Real Estate Investors: Investors who own rental properties may not have traditional income but can demonstrate their financial health and income through bank statements.

Seasonal Workers: Individuals working in industries with seasonal income spikes, such as tourism or agriculture, might find it challenging to prove their annual income with traditional documentation. Bank statements can show the flow of money throughout the year, illustrating their ability to repay the loan.

Retirees: Some retirees might have substantial savings and investment income that doesn’t come in the form of a traditional paycheck. Bank Statement Mortgages can help prove their financial capability.

Gig Economy Workers: Those who earn their income through various gig economy platforms may not have traditional income verification forms but can use bank statements to show consistent earnings.

Bank Statement Mortgages are designed to accommodate the unique financial situations of borrowers who are financially responsible and capable of repaying a mortgage but don’t fit the traditional lending mold. By providing an alternative way to demonstrate income through bank statements, these mortgages can open the door to homeownership for many who would otherwise be excluded.

What are Bank Statement Loan Requirements?

Bank Statement Loan requirements can vary by lender, but there are common criteria that most borrowers need to meet to qualify for this type of mortgage. Here are the typical requirements:

Proof of Income Through Bank Statements: Lenders typically require 12 to 24 months of personal or business bank statements to verify income. They use these statements to calculate the monthly income amount that will be considered for loan qualification.

Credit Score: While requirements can vary, many lenders require a minimum credit score around 620 or higher. However, some lenders may accept lower scores with compensating factors.

Down Payment: Bank Statement Loans often require a higher down payment compared to traditional loans. Expect to need at least 10% to 20% of the purchase price, though this can vary based on the lender and the borrower’s credit profile.

Debt-to-Income Ratio (DTI): Lenders will calculate a DTI ratio to determine how much of your income goes towards paying debts. The acceptable DTI ratio can vary, but typically lenders look for a DTI below 43%.

Proof of Self-Employment or Business Ownership: Borrowers need to prove they have been self-employed or a business owner for at least two years. This can be verified through a combination of business licenses, letters from clients, CPA letters, or contracts.

Property Type: Bank Statement Loans can be used for purchasing a primary residence, second homes, and investment properties. However, the loan terms might vary depending on the type of property.

Appraisal: A property appraisal is usually required to determine the value of the home you intend to purchase or refinance.

No Recent Major Credit Events: Borrowers should not have recent bankruptcies, foreclosures, or short sales. A period of recovery (usually 2 years) may be required.

It’s important to note that Bank Statement Loans might come with higher interest rates and fees compared to traditional mortgages, reflecting the higher level of risk lenders associate with less traditional income documentation. Always shop around and compare offers from different lenders to find the best rates and terms for your situation. Consulting with a mortgage professional like us can also provide personalized advice and help navigate the specifics of securing a Bank Statement Loan.

Discover why people love working with us by exploring our outstanding reviews. Our clients’ experiences speak for themselves.

Why Choose Us?

With our extensive 20 plus years of experience in mortgage financing, we excel in delivering both conventional and non-conventional financing options tailored to suit our customers’ needs. Collaborating with a wide range of investors and lenders, we proudly offer a diverse range of loan programs. Our utmost aim is to provide borrowers with the most optimal financing solutions available.

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