In 2021, the non-QM loan market hit a record $28 billion in the U.S. This shows a big rise in demand for loans that don’t need traditional income proof. This is especially true for self-employed people and those without W-2 income.
Bank statement mortgages are a quick way to own a home. They let you use your bank statements instead of tax returns or pay stubs. These loans are more flexible than regular mortgages. You can borrow from $250,000 to $2,500,000, based on the lender’s rules.
Key Takeaways
- Bank statement mortgages offer faster closing options for self-employed and non-W2 borrowers
- Loan amounts can range from $250,000 to $2,500,000, with credit score requirements starting at 620+
- Flexible down payment and DTI ratio requirements, with some lenders accepting up to 50% DTI
- Variety of property types eligible, including primary residences, second homes, and investment properties
- Shorter 15-year terms available with lower interest rates compared to 30-year fixed mortgages
What is a Bank Statement Mortgage?
A bank statement mortgage is a special loan for those who can’t prove their income with tax returns or W-2s. It’s great for self-employed people, business owners, freelancers, and gig workers. They often struggle to show their income in the usual ways.
Types of Bank Statement Loans
There are different types of bank statement mortgages:
- Asset depletion loans: These loans use assets like retirement accounts or investments as income.
- Stated income loans: Here, the lender trusts the borrower’s income statement without needing lots of paperwork.
- Non-QM mortgage programs: These loans don’t follow the rules of government-backed loans like Fannie Mae and Freddie Mac.
Income Verification with Bank Statements
To get a bank statement mortgage, you need to show 12 to 24 months of bank statements. This helps self-employed people and others with non-traditional income. Lenders check if the income is steady and regular.
“Bank statement loans are a game-changer for self-employed borrowers and others with unique income streams. They provide an alternative path to homeownership when traditional income verification methods fall short.”
Benefits of Bank Statement Mortgages
Bank statement loans are great for self-employed folks and those with non-traditional income. They offer flexibility in income verification. Instead of tax returns or pay stubs, you can use bank statements to show your earnings. This makes it easier for self-employed, freelancers, and entrepreneurs to get a mortgage.
The underwriting process for these loans is quicker, with faster approval and closing times. This is great for those who need to act fast on a property. Also, these loans have relaxed credit score and debt-to-income ratio rules. This means more people can become homeowners.
Flexibility for Self-Employed Borrowers
Bank statement mortgages are very flexible for self-employed borrowers. They don’t need tax returns or pay stubs. Instead, they use 12 to 24 months of bank statements to check income. This is super helpful for self-employed, freelancers, and gig workers with variable incomes.
Streamlined Underwriting Process
The underwriting for bank statement loans is streamlined compared to regular mortgages. Lenders look mainly at bank statements to see if you can repay the loan. This leads to faster approval and closing timelines. It’s perfect for those who need to move quickly.
how quickly can you close with a bank statement mortgage
Bank statement mortgages close faster than traditional loans. If you provide all needed documents quickly, you can close in 30 days. But, many loans take 45 days or more because of lender times and how fast borrowers respond.
The time it takes to close a bank statement mortgage depends on the lender and how fast you give them what they need. These mortgages are quicker to approve and close, helping you move into your new home sooner.
| Loan Type | Average Closing Time |
|---|---|
| Conventional Loans | 43 days |
| FHA Loans | 44 days |
| VA Loans | 53 days |
| Bank Statement Mortgages | 30-45 days |
The time to close a bank statement mortgage can change based on several things. This includes how fast you give documents, the lender’s speed, and any special situations that come up. To close quickly, stay organized and talk clearly with your lender.
Bank Statement Loan Requirements
Credit Score and Debt-to-Income Ratio
To get a bank statement loan, you need a credit score of at least 660. Your debt-to-income ratio can be as high as 55%. Lenders look at 12-24 months of bank statements to check your income. This is different from using tax returns or pay stubs.
This method is good for self-employed people or those with other income sources. It’s a flexible way to get a loan.
The down payment for a bank statement mortgage is 10% of the home’s price. This is less than the 20% needed for a regular loan to avoid PMI. This lets you use your assets and keep more money during the home buying process.
| Requirement | Bank Statement Loan | Conventional Mortgage |
|---|---|---|
| Minimum Credit Score | 660 | 720 |
| Maximum Debt-to-Income Ratio | 55% | 43% |
| Minimum Down Payment | 10% | 20% |
Bank statement loans offer flexible credit and income checks. They help self-employed people, freelancers, and those with non-traditional income. This is great for those who can’t get regular mortgages.
Types of Properties Eligible
Bank statement mortgages are a flexible option for many property types. They meet the varied needs of borrowers. These loans are for primary homes, vacation spots, and investment properties. They help self-employed people and those with unusual income sources.
Condominiums and other unique properties can also get bank statement loans. This gives borrowers more choices than traditional mortgages. It’s a big plus of these mortgage solutions.
- Primary residences
- Vacation homes
- Investment properties
- Condominiums and other property types
In California, bank statement loans are a big help. The state’s high cost of living and varied economy need flexible mortgages. These loans have good interest rates and terms that can be tailored. They’re a great option for buying different types of properties.
“Bank statement mortgages provide the flexibility and convenience that many California borrowers need to achieve their real estate goals, regardless of their property type or income source.”
Down Payment Requirements
Securing a bank statement mortgage means looking at the down payment first. Unlike regular mortgages, which often need a 20% down payment to avoid PMI, bank statement loans are more flexible.
The minimum down payment for a bank statement mortgage is usually 10%. This makes these loans easier to get for those who don’t have a lot saved up. This is especially true for those with non-traditional income, like self-employment, freelancing, or entrepreneurship.
The down payment amount can change based on your credit score and the loan size. Those with better credit scores might only need to put down 10%. But, those with lower scores might have to pay up to 20%.
Compared to regular mortgages, which often ask for 3% to 5% down, bank statement loans are more open. They’re great for those looking into alternative income mortgage options or non-QM mortgage programs.
Knowing the down payment rules for bank statement mortgages helps borrowers make smart choices. It lets them find a home loan that fits their financial situation and needs.
Income Sources Accepted
Bank statement loans are flexible when it comes to income verification. They accept many income sources, not just traditional jobs. This means self-employed, freelancers, consultants, and those with seasonal or part-time jobs can often get these loans.
Seasonal and Part-Time Income
One big plus of bank statement loans is they consider seasonal and part-time income. If a borrower shows steady deposits in their bank accounts for 12 to 24 months, lenders might approve them for a mortgage. This is true even if their income isn’t steady all year.
- Bank statement loans accept income from self-employment, freelance work, consulting, and seasonal or part-time jobs.
- Lenders check for steady deposits in the borrower’s bank accounts over 12 to 24 months to see if they can repay the loan.
- This makes bank statement loans great for those with income that varies or comes from non-traditional sources.
By looking at a borrower’s income stability over time, not just their current job, bank statement loans offer a chance to own a home. This is for those who don’t fit the usual mortgage applicant profile.
| Income Source | Accepted for Bank Statement Loans |
|---|---|
| Self-Employment | Yes |
| Freelance Work | Yes |
| Consulting | Yes |
| Seasonal Income | Yes |
| Part-Time Income | Yes |
By accepting more income sources, bank statement loans help more people buy homes. This includes those who might not qualify for traditional mortgages.
Loan Terms and Options
Bank statement mortgages offer flexible loan terms and options. They meet the financial needs of many borrowers. These programs include fixed-rate and adjustable-rate mortgages for self-employed and non-traditional income earners.
Adjustable-Rate Mortgages (ARMs)
Adjustable-rate mortgages (ARMs) are a popular choice. They start with a fixed rate and then adjust every six months. This adjustment is based on the SOFR (Secured Overnight Financing Rate) index.
Borrowers can pick from different ARM options. These include 6-month SOFR ARMs, 1/6 ARMs, 5/6 ARMs, 7/6 ARMs, and 10/6 ARMs. This lets them choose a loan term that fits their budget and goals.
These ARMs offer flexibility. They start with lower interest rates and can adjust to market rates later. This is great for self-employed borrowers or those with variable income.
- 6-month SOFR ARMs
- 1/6 ARMs
- 5/6 ARMs
- 7/6 ARMs
- 10/6 ARMs
Bank statement mortgages also have traditional 15-year and 30-year fixed-rate options. These loans have consistent monthly payments for the loan’s life.
The variety of loan terms and options in bank statement mortgages is a big plus. It lets borrowers tailor their financing to their needs. Whether they want a fixed-rate loan for stability or an adjustable-rate mortgage for flexibility, there’s an option. This makes these non-QM mortgage programs a great fit for today’s housing market.
Finding the Right Lender
Finding the right lender for a bank statement mortgage is key. Not all lenders offer these loans. You need to find ones that specialize in non-QM mortgage options and alternative income verification.
These lenders will guide you through the application. They’ll explain the requirements and offer competitive rates and terms.
To find the right lender, research and compare several options. Look for lenders that work well with self-employed individuals and those with alternative income sources. They’ll know the non-QM mortgage programs that fit your financial situation.
- Seek out lenders that specialize in finding the right lender for bank statement mortgages
- Ensure the lender has expertise in non-QM mortgage programs and alternative income mortgage options
- Compare rates, fees, and loan terms to find the most favorable deal for your needs
- Communicate openly with the lender about your financial history and goals to ensure a smooth application process
By researching and finding the right lender, you boost your chances of getting a bank statement mortgage. An experienced provider will help you achieve your homeownership dreams.
| Lender | Specialization | Loan Options | Approval Time |
|---|---|---|---|
| ABC Mortgage | Bank statement mortgages, non-QM programs | Adjustable-rate, fixed-rate, interest-only | 10-14 days |
| XYZ Financial | Alternative income verification, self-employed borrowers | Jumbo loans, portfolio loans | 14-21 days |
| 123 Lending | Bank statement mortgages, investment properties | Conventional, FHA, VA | 7-10 days |
Preparing for the Application Process
Applying for a bank statement mortgage can open doors to new financing options. This is especially true for self-employed borrowers or those with non-QM income. To make the application process smooth, borrowers need to prepare the right documents and information.
The application process usually asks for 12-24 months of bank statements. These statements help verify income and check creditworthiness. Borrowers should also gather other financial records, like a business license or an appraisal of the property.
Applicants need to provide detailed info about their income, credit history, and finances. Working with an experienced lender can help. They can guide you through the process and find the best loan for your needs.
Preparing the Required Documentation
- 12-24 months of personal or business bank statements
- Business license or other documentation to verify self-employment
- Property appraisal report
- Details about income sources, including seasonal or part-time work
- Credit history and debt-to-income ratio information
Collaborating with an Experienced Lender
Working with a lender who knows non-QM mortgage programs and alternative income mortgage options is beneficial. They understand self-employed borrowers’ financial situations. Their knowledge helps make the application process smoother and faster.
| Borrower Preparation | Lender Expertise |
|---|---|
| Gathering required documentation | Understanding alternative income sources |
| Providing detailed financial information | Navigating non-QM mortgage programs |
| Maintaining consistent income and expenses | Streamlining the application process |
By being proactive and working with an experienced lender, borrowers can improve their chances of a successful application. This unlocks the benefits of these alternative financing options.
Conclusion
Bank statement mortgages are great for self-employed people and those with non-traditional income. They offer more flexibility in income proof, down payments, and loan terms. This makes it easier for more people to own a home.
Working with a skilled lender can help you understand what you need for a bank statement mortgage. This way, you can reach your dream of owning a home. These options are especially helpful for those who have found it hard to get traditional loans.
If you’re self-employed or have a unique income, a bank statement mortgage might be for you. Look into your options, talk to a lender, and start your journey to homeownership.
FAQ
What is a bank statement mortgage?
A bank statement mortgage is a loan that lets you qualify with bank statements instead of tax returns. Lenders ask for bank statements to show you can pay back the loan.
What are the benefits of a bank statement mortgage?
These mortgages are flexible for income proof, helping self-employed and freelancers. The process is quicker, making it easier to get approved and close the loan fast.
How quickly can you close with a bank statement mortgage?
Closing in 30 days is possible if you provide all documents quickly. But, it often takes 45 days or more. The time depends on the lender and how fast you can provide the needed info.
What are the requirements for a bank statement mortgage?
You need a credit score of 620 and a debt-to-income ratio up to 50%. Lenders check 12 or 24 months of bank statements for income. A 10% down payment is required, which is less than traditional mortgages.
What types of properties are eligible for a bank statement mortgage?
You can use these mortgages for homes, vacation homes, and investment properties. Even condominiums and other properties are eligible, offering more options than traditional mortgages.
What income sources can be used for a bank statement mortgage?
These loans accept various income sources like self-employment and freelance work. As long as there are consistent deposits in your bank accounts, lenders can use this to qualify you for a mortgage.
What loan terms and options are available with a bank statement mortgage?
You can choose from 15-year fixed, 30-year fixed, and adjustable-rate mortgages. Options include 6-month SOFR ARMs and 1/6 ARMs. These ARMs adjust every six months based on the SOFR index, offering flexibility in loan terms.
How can I find the right lender for a bank statement mortgage?
Not all lenders offer these mortgages. Look for experienced lenders who specialize in them. They can guide you through the process and offer the best rates and terms. Comparing lenders helps find the right one for your financial situation.