By Matt Allen
Vice President, Portfolio Lending (NMLS #415037)

What is a Bank Statement Loan?

Oct 22, 2019

  • Non-QM Loans
  • Mortgage Programs
  • Bank Statement Loan

Now there's an option for self-employed borrowers

Some people believe the American Dream is to start your own business and create wealth and success. Others may see the dream as purchasing your own home. Unfortunately, these two dreams don’t always go well together. A bank statement loan can be the solution self-employed borrowers are looking for when buying a home. 

To apply for a conventional mortgage loan, among the paperwork, the borrower usually must provide pay stubs and W-2’s from the past two years. But if you’re self-employed or own your own business, you don’t have W-2’s or pay stubs. So what choice do you have when seeking a mortgage loan?

A relatively new loan program that lenders have begun offering is the bank statement loan. This loan program requires only the bank statements of self-employed borrowers to determine if they can produce sufficient income to warrant approval for a mortgage loan. Here is an example* of the requirements needed to secure a bank statement loan:

  • Provide 12 or 24 months of bank statements from the same account
  • 680 minimum credit score
  • 10% down payment required with mortgage insurance
  • $170,000 loan minimum (up to $1.25 million)
  • A debt-to-income ratio of up to 45%
  • A minimum of 2 years self-employment or 1099 contract work with an exception can be made to 1-year self employed if the same line of work prior.

Don’t let business ownership prevent you from buying the home of your dreams. Look into a flexible bank statement loan and spend your time running your business, not worrying about how to qualify for a mortgage loan.  Here's more information to find out if a bank statement loan is right for you, or give us a call at 855-465-0753.

 *These are only examples of requirements for a bank statement loan.