Bank Statement Program
What options do I have to qualify for a mortgage if I don’t show enough income on my tax returns and do not have W2 income?
This is a question I am frequently asked. Most people think you have to have 2 years tax returns in order to qualify for a purchase; there is an alternative.
Let’s welcome the bank statement program: a non traditional mortgage product. This is a relatively new product and benefits those that: are self employed, own your own business, freelance employees, contract workers, and entrepreneurs to name a few. It allows you to qualify for a mortgage when your tax returns do not reflect your full income. Bank Statement programs permit one to qualify Based on the deposits received in your bank account over the span of 12 months; this can be either a personal and or business account. After calculating your average monthly deposits there is a certain expense ratio lenders typically use dependent on your profession and how many people you employ.
Not having to provide w2’s and or 2 years tax returns is a huge advantage, but there are a few more I’d like to highlight below:
you can get a bank statement loan with as little as 15% down
You can typically have a high DTI ratio (debt to income) 50
This is typically done as a fixed mortgage but can be an ARM
Cash out refinance up to 85% LTV
Business bank statements - either 12 or 24 months - may require a P&L statement , which is typically prepared by your CPA (accountant)
The bank statement programs are great for some but do have some draw backs.
You must be self employed for 2 years
Bank statement programs are associated with higher interest rates (dependent on credit scores and LTV)
Not all lenders offer these products, and those that do have a bit of leeway as they are non traditional mortgages
Bank statement programs provide an opportunity for self employed borrowers and or business owners to qualify for a mortgage when they cannot qualify going through traditional route (2 years returns and or W2’s). They are a great asset to those that can take advantage of them. If you are looking to purchase a property and are not yet pre-qualified, reach out to your lender. See what options are available to you. You might find yourself in a Bank Statement program. I’d love to help! If you're looking to know more information about the bank statement program. Please contact me from the information below!
Loan Assistant to Walter Neil
Franklin Loan Center
760-779-8100 office |760-777-2007 cell
44800 Village Court Palm Desert, CA 92260