A bank statement program is a home loan program that uses bank statements to calculate a borrower’s income. This is an alternative documentation loan type instead of using tax returns and W-2s in the qualification process. These loans are for self-employed borrowers who typically have substantial tax write-offs that make it challenging to demonstrate the necessary income to prove their ability to repay the loan. The bank statement loan programs use either personal or business bank statements to qualify borrowers.
What is a Bank statement loan?
A bank statement loan is a type of mortgage that allows self-employed borrowers to verify their income based on their personal or business bank statements, rather than traditional methods like tax returns, W-2s, or paystubs. Bank statement loans are generally used by self-employed individuals, small business owners, or independent contractors. Borrowers do not have to own 100% of the business. Our Bank Statement program provides a loan solution to help underserved credit-worthy self-employed borrowers who otherwise would not qualify for a home loan.
- Loans up to $3 million with a minimum of $150,000
- Purchase and cash-out or rate-term refinance
- Owner-occupied, second homes, and investment properties
- 12 or 24 months’ business or personal bank statements
- Borrowers can own as little as 50% of the business for business bank statements and 25% for personal bank statements
- Two years’ seasoning for foreclosure, short sale, bankruptcy or deed-in-lieu
- 1099 option available
- Profit and Loss (P&L) statements are a valid form of income verification
- Permanent and non-permanent residents allowed
- Loans will be qualified using a default expense factor of 50%. Companies with a lower expense factor will require a statement from a third party CPA, tax preparer, or bookkeeping company (some industries with traditionally higher expense factors, such as restaurants, will be underwritten with a 70% expense factor).
