Bank Statement Loans | Traditional Home Loans |
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Bank statement loans are a type of non-qualified mortgage loan that allows you to qualify based on bank statements instead of tax returns. The lender will require prospective borrowers to provide a certain number of months’ worth of bank statements in order to prove their ability to repay the loan. This enables self-employed borrowers to access home loans, even if their taxes don’t reflect their full income.
Bank statement mortgage programs are often a good option for self-employed individuals, business owners, and retirees who need an alternative income verification option. Find out whether a bank statement home loan from Griffin Funding is a good fit for you.
Being self-employed does not mean you can’t get home financing. You do not have to submit any tax returns or financial statements other than your bank statements to purchase a new home or to cashout refinance an existing home that you already own.
This program is perfect for business owners, realtors, consultants, restaurant owners, gig economy, entrepreneurs and more.
Bank statement loans have taken over the traditional stated income loans as an alternative for borrowers who are unable to verify their income in the traditional way by providing the previous two years tax returns, W2s and pay stubs. These are non-QM loans, nontraditional loans or expanded criteria loans that allow other forms of documentation to prove the ability to repay. Just as it sounds, a bank statement loan allows the borrower to verify his or her income with bank statements.
These type of loans have provided a solution to borrowers’ challenge of using the net income claimed on their tax returns rather than the true net income that they make. This makes many borrowers ineligible for a loan. To apply for a bank statement loan, the self-employed borrower can provide the mortgage lender with as little as 12 months of bank statements which show regular deposits. This allows the lender to see how much you can afford to borrow. The lender would then verify your bank statements by calling your bank or by filling out a verification of deposit (VOD) request and mailing or faxing it to your bank. If you are using your business bank statements to qualify the lender will still need to see the expenses you incur as a result of owning a business but will not penalize you for expenses that you have written off on your tax returns.
Bank Statement Loans | Traditional Home Loans |
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In summary, these are the advantages of a bank statement loan:
While bank statement home loans offer greater flexibility and unique opportunities for many types of borrowers, they’re not well suited for everyone. Here are a few potential disadvantages that may apply to certain borrowers:
At Griffin Funding, we aim to help our borrowers find the best loan options with favorable terms based on their individual circumstances.
Eligibility for a bank statement requires total deposits minus disallowed deposits. This amount is then divided by the number of bank statements, whether it is the 12 or 24 months statement.
Another option is that if the co-borrower is a W2 employee you can use a hybrid of W2 and tax return income from the co-borrower and bank statement income from the borrower or assets from the co-borrower and bank statements from the borrower. Non-QM loans can use multiples sources of blended incomes to qualify.
Deposits which are disallowed in regards to a bank statement loan include transfers between bank accounts and cash or large deposits, which can raise a level of concern and may require a letter of explanation.
Self-employed workers have access to different bank statement loan programs depending on the state they’re in and the lender. Griffin Funding is proud to offer loans for borrowers in many states across the U.S.
Find your state and apply for a bank statement mortgage today:
We are proud to help borrowers across the country find bank statement loans that help them make their dreams of homeownership a reality.
Because interest rates and other important aspects of a bank statement loan program depend on the lender’s unique requirements for approval, it’s important for self-employed borrowers to do their due diligence before settling on a loan provider.
Here are a few general steps to finding the right mortgage lender:
Our team at Griffith Funding can help you find a bank statement mortgage loan program tailored to your needs with our cutting-edge technology and dedicated team of financial experts. Our team specializes in loans for self-employed individuals, so we understand what matters when it comes to finding the right home mortgage loan.
To apply for a bank statement loan, you can upload the last 12 or 24 month’s worth of bank statements from a business account into the system or have our digital mortgage software sync with your bank and pull the information from your account. Bank statement loans are processed through a manual underwriting process. Since these loans are being reviewed by a person, they can take between 21 and 30 days to process. For more complex cases, it may take up to 45-60 days.
If you’re self-employed, your income is typically difficult to document, and you have a significant amount of tax write-offs. This can be problematic when you are looking to buy a home, and it can be tough to qualify for a traditional home loan. However, bank statement programs allow mortgage lenders to make loans without having to follow the traditional route of providing tax returns. This type of loan is great for people who are self-employed, independent contractors, or those who earn a seasonal income. These would-be home buyers are often more qualified than salaried employees, but their tax returns are far from run-of-the-mill.
Ricardo is an excellent example of how a bank statement loan can help someone who is self-employed or who owns their own business. Ricardo, as a successful self-employed construction worker, he had a healthy and regular income each month, but after writing off his expenses, he was unable to report sufficient income to qualify for a traditional loan.
Thanks to a bank statement lending program, Ricardo was able to apply for a bank statement loan without having to show his tax returns, which meant that his business write-offs were not a problem. Ricardo’s monthly income bank deposits over the past 12 months were enough to qualify him for a bank statement loan. His bank statement showed:
Ricardo had a six-month average income of around $6,000 per month. After reviewing a full year of Ricardo’s bank statements, the lender was able to approve a loan based on that amount. Although the down payment and interest rate were slightly higher than a traditional loan, Ricardo was happy to be able to purchase a home. What’s more, he could always return the following year and if he could report an increase in income he would have the option of refinancing with a conventional loan which could have a lower interest rate.
With a bank statement loan, it is possible to qualify for a mortgage with just bank statements. Bank statements are used in lieu of traditional income verification methods. Typically, 12 or 24 months’ worth of bank statements are required, but some individuals may be able to qualify based on only one, two, or three months.
It’s also important to note that factors like your credit score will also be taken into consideration when establishing your loan terms.
For all home loans, lenders need to verify your income before approval. In the case of bank statement loans, bank statements are used as income verification instead of W2s and your tax return. Typically, bank statement mortgage loans require 12 or 24 months’ worth of bank statements. However, in some cases, you may be able to get approved with only two month’s worth of bank statements. One of our loan officers will then manually review your bank statements and verify the information with your bank.
Because of this alternative income-verification method, bank statement mortgages have become a popular option for self-employed individuals whose W2s and tax returns would not accurately reflect their full income.
Refinancing your home loan allows you to turn your home’s equity into cash in some cases. Those with existing mortgage loans may be able to refinance their loan with bank statements with a cash-out refinance.
This option allows you to leverage the equity in your home in exchange for cash, which you can then use to pay off debts or other major expenses. In most cases, borrowers can have a cash-out refinance loan matching up to 85% of the value of their property.
When lenders are reviewing your bank statements to determine whether they can approve you for a loan they are looking for the following information:
It depends. On most of our personal and business bank statement loans, we require the last 12 or 24 months’ worth of bank statements.
In some cases, we do allow two-month bank statement loans. If you’re only providing two month’s worth of bank statements, you will need to attest and declare your qualifying income and your account balance must be positive.
A credit score is one of the basic bank statement loan requirements for every lender.
Having a higher credit score is a good way to improve the chances of approval and keep your interest rates low on any type of mortgage including a bank statement loan. In order to qualify for bank statement loans with Griffin Funding, borrowers need a credit score of 620 or higher.
Yes, retirees can also qualify for bank statement loans since they are not receiving a typical stream of income that would be accurately reflected on their income tax returns.
It’s important to clarify that loans for self-employed individuals can apply to a variety of situations including those who are business owners, freelance works, gig economy workers, and realtors.
It can be difficult to find a bank statement loan with a reliable lender. However, since these loans are based on bank statements instead of traditional income verification methods, they often open doors of opportunity for many borrowers who otherwise wouldn’t be able to qualify for a mortgage. As long as you have the bank statements to prove your income and a decent credit score, it otherwise shouldn’t be too difficult to qualify.
When it comes to getting a bank statement loan, the main hurdle is finding the right lender to work with. Our team at Griffin Funding works hard to ensure access to bank statement loans for self-employed workers of all backgrounds and industries. Many gig workers, freelancers, contractors, and other workers rely on these options to afford their homes, and our goal is to help more professionals find the right bank statement loan for their specific needs.
There aren’t any other loans that require bank statements, but you can use bank statements as a way to prove your income and qualify for other types of mortgages. In fact, you can use bank statements as one source of income verification for many of our Non-QM loans, such as jumbo loans and asset-based loans.
If you’re looking for a self-employed mortgage, a bank statement loan is usually the best option. However, depending on your other sources of income, such as a full-time job in addition to your self-employed business endeavors, there may be other loan options for you to consider, such as:
United Executives is proud to offer several self-employed home loan products including both personal and business bank statement loans. Whatever your employment and income circumstances, our loan officers can help find the best mortgage solution for your needs
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