For many who invest in homes, your financial history and income may be more difficult to review when a bank goes to underwrite your mortgages. Several types of loan programs look at credit scores, and W2s for more data on your financial stability. However, self-employed borrowers, for example, may not qualify for a traditional underwriting process because their tax returns don’t reflect their true worth as a borrower. In this week’s blog, Professional Mortgage Solutions in Rego Park, NY is here to share tips for working with bank statement loans for real estate investments.
The Benefits of Using a Bank Statement Loan
One of the many benefits of using a bank statement loan to finance a home is that you do not need to provide excessive tax return and traditional employment documentation to show that you are financially worthy of a mortgage. Many entrepreneurs, investors, people with seasonal income, or independent contractors will benefit from a review of their self-owned assets and businesses as opposed to common tax return forms. Bank statement loans make real estate investment much simpler for many.
Qualifying for a Bank Statement Loan
As we stated, you may not need to provide any tax returns or W2s to qualify for a bank statement loan. Some underwriters will as for bank deposits to determine how much income a borrower could have to make a mortgage payment each month. You may want to speak to your accountant on how to document this in your personal and business accounts. Lenders usually like to see around 12 months of personal bank statements and 24 months of business statements. They will run calculations on this data to determine average monthly income and what amount of financing to provide. Borrowers may also provide a profit and loss statement, especially if you use a single account for personal and business finances.
To qualify for a bank statement loan, you should have good or better credit (usually a score of at least 680 is required). Financing may be available for up to 90% of the home’s value, which means you’ll need to supply at least 10% or more as a down payment, depending on your financial status.
Tips for Using Bank Statement Loans
Many people will use a bank statement loan to purchase their primary home. Many others use this program to buy second homes or investment properties. Some people even have enough assets an income to qualify for a jumbo loan. A jumbo loan is a mortgage that is higher than then lending limits set by mortgage leaders Fannie Mae and Freddie Mac. To secure a high-value loan using bank statements, many lenders will want to see you provide a down payment of at least 20% or more.
Learning More About Bank Statement Loans
There are plenty of ways you can benefit from using bank statement loans, our staff are experienced and here to help. There are many solutions for borrowers who do not have a lot of traditional income documentation. Contact Professional Mortgage Solutions for more insights on using bank statement loans at our Rego Park, NY Offices.