Bank statement loans are an excellent option for self-employed borrowers who need an alternative to traditional income verification methods. Instead of relying on tax returns, these loans use bank statements to demonstrate your ability to repay the loan.
Bank statement loans are non-qualified mortgage loans that allow you to qualify based on your bank statements rather than tax returns. Borrowers need to provide a specific number of months’ worth of bank statements to prove their income and ability to repay the loan. This option is particularly useful for self-employed individuals, business owners, and retirees who may not have traditional income documentation.
The application process for a bank statement loan differs from that of a conventional mortgage. You’ll need to submit bank statements from the past 12 to 24 months, along with information about your business and its expenses. If you have both personal and business accounts, you'll need to provide statements for both. Lenders may also inquire about your business type, number of employees, and location to assess your expenses.
Depending on your credit score, you may be required to make a larger down payment. Typically, a credit score of 620 or higher is needed, though a score of 700 or more can secure better rates and terms.
Types of Bank Statement Loans
There are various bank statement loan programs available, which can vary by lender and borrower circumstances. Most lenders require a minimum of 12 months of bank statements, but some might accept fewer months. Providing 24 months of statements may help you qualify for better rates and terms.
Some lenders may require business bank statements instead of personal ones. If you lack business bank statements, you might still qualify but with a smaller percentage of your deposits considered for qualification. In certain cases, you may also need to provide a profit and loss (P&L) statement prepared by a tax professional.
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"Hi, my name is Chet Decker. I'm the Executive Vice President at The Mortgage Link, Inc., where we specialize in providing personalized mortgage solutions, fast and customized quotes, competitive rates, and exceptional service with integrity."
For Texas Consumers Only: Consumers wishing to file a complaint against a company regarding the origination and/or servicing of your mortgage loan or a complaint against a residential mortgage loan originator concerning residential mortgage loans on real estate located in Texas should complete and send a complaint form to the Texas department of savings and mortgage lending, 2601 north Lamar, suite 201, Austin, Texas 78705. complaint forms and instructions may be obtained from the departments website at www.sml.texas.gov. a toll-free consumer hotline is available at 1-877-276-5550.
The department maintains a recovery fund to make payments of certain actual out of pocket damages sustained by borrowers caused by acts of licensed residential mortgage loan originators. a written application for reimbursement from the recovery fund must be filed with and investigated by the department prior to the payment of a claim. for more information about the recovery fund, please consult the departments website at www.sml.texas.gov.
Standard LSM disclosure: This is not a commitment or offer of credit. All applications must be submitted in writing and are subject to credit approval. Not all borrowers who apply will be approved.
