Bank Statement Loans

Bank statement loans are a unique category of non-qualified mortgage loans that offer qualification based on bank statements rather than tax returns.

Instead of relying on tax documents, lenders require borrowers to provide several months’ worth of bank statements as evidence of their loan repayment capacity. This allows self-employed individuals to secure home loans, even if their tax returns do not accurately reflect their actual income.

Bank statement mortgage programs serve as an excellent alternative income verification option, particularly beneficial for self-employed individuals, business owners, and retirees. By considering bank statements, these programs offer greater flexibility for those who may not meet traditional income verification requirements.

Bank statement loans are popular with the following types of borrowers:

  • Business owners
  • Freelance employees
  • Consultants
  • Contract workers
  • Independent contractors
  • Sole proprietors
  • Gig economy workers
  • Realtors
  • Entrepreneurs
  • Retirees

Bank Statement Loans

  • These loans are built for people who do not have W2 jobs such a business owners, realtors, consultant, restaurant owners, and gig economy workers (with a valid business license).
  • These loans allow the borrowers to use bank statements as the form of proof that they are able to pay back the loan amount

Traditional Home Loans

  • The loans are for most employees (no self-employed) with a W2, which allows borrowers to choose from a variety of options, from short-term ARMs to 30-year fixed rates.
  • They generally require a minimum down payment of anywhere from 5% to 20% and a credit score of more that 700

Advantages of a Bank Statement Loan:

  • Tax returns or tax transcripts are not required by the lender.
  • Income statements are based on regular monthly deposits.
  • Lenders can assess 12 or 24 months of bank statements.
  • Business owners can provide 12-24 months of P&L statements, depending on requirements.
  • Bank statement home loans may be obtained with as little as a 10 percent down payment.
  • Cash-out refinance loans of up to 80 percent of the property’s value are possible.
  • Borrowing limits can reach up to $5 million.
  • Bank statement lenders typically accept a maximum debt-to-income ratio of 50 percent.
  • Both fixed-rate and adjustable mortgage options are available.
  • Interest-only mortgages may be an option to consider.