Bank Statement Home Loans
No W2s or Tax Returns Required
Bank Statement Loans allow eligible self-employed borrowers to qualify using bank deposits rather than traditional income documentation. They can be a good option when substantial business deductions reduce the income shown on tax returns.
Qualifying income is generally calculated using the average eligible deposits shown on 12 or 24 months of personal or business bank statements, depending on the program.
Overview
Key Features of a Bank Statement Loan
Depending on the program, available features may include:
- Financing up to 90% LTV with no mortgage insurance
- Credit scores starting at 660
- Loan amounts up to $3 million
- No tax returns required
- Personal or business bank statements accepted
- Two years of self-employment history
- Two-year waiting period after a foreclosure, short sale, bankruptcy, or deed-in-lieu
- Up to 80% LTV for second homes and investment properties
- Purchase, cash-out refinance, and rate-and-term refinance options
Bank Statement Home Loan FAQs
How far back do lenders look at bank statements?
Lenders will require bank statements from about 12 months back if you own 50% or more of your business. If you own 25% of your business, lenders will want up to 24 months of bank statements. They can take a look at your savings accounts and checking accounts and prefer that the statements come from the same accounts for all 12-24 months. This is necessary to verify that you have the funds to repay the loan and that you are a trustworthy borrower.
Can I get a loan with a bank statement?
Yes, if your bank statements show that you are able to repay a loan and have some type of income. A lender will look at your entire financial situation in order to approve a bank statement home loan.
What is required for a bank statement loan?
The main thing that lenders look at will be your bank statements from the past year or two. They will also analyze your financial situation and history including DTI, employment history, credit scores, and how much of a down payment you are able to make. In addition, if you are self-employed lenders will look at your business information and related documents that prove your business is legitimate.
How much income is needed for a bank statement loan?
Different lenders will have varying requirements for income. This will also depend on the loan amount that you need, and your credit history. Something that lenders will typically look at to evaluate your ability to repay the loan is your debt-to-income ratio. Generally, lenders want to see that it is between 40% to 50% or lower.
What are the pros and cons of a bank statement loan?
If you are self-employed and do not have W2s or traditional tax returns, a bank statement home loan can provide you with financing. If you have a fluctuating income or many different incomes, a bank statement home loan will increase your chances of approval. Bank statement home loans are very flexible as well. They may offer higher loan amounts and less credit score requirements.
However, bank statement loans do have very specific criteria for qualification, the most important being your bank statements. Your bank statements must prove that you are able to repay the loan and have some type of income. These loans also come with higher interest rates and there are less lender options that supply them.