Bank Statement Loans: The Benefits of Interest-Only Payment Options

Darrin Seppinni
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Lower Bank Statement Mortgage payments create an easier path to buying or refinancing a home

An interest-only bank statement mortgage is a loan with monthly payments only on the interest of the amount borrowed for an initial term at a fixed interest rate. The interest-only period lasts for 10 years, and the total loan term is 40 years. After the initial 10-year interest-only phase is over, you start paying the principal and interest for the remainder of the 30-year loan term.

Key Features

The initial monthly payments are lower:

Since you’re only making payments towards interest the first 10 years, your monthly payments are lower compared to a fully amortized loan with principal and interest payments.

May help you afford a pricier home:

Affordability has become a bigger challenge for borrowers with the continued rise in home prices and the more recent increase in rates.

Interest-only Bank Statement loans let you pay down equity on a flexible payment schedule:

If you’re making extra payments towards an interest-only bank statement loan, the lower principal balance can generate a lower payment each month. In other words, the lender will recast the interest-only payments based on the new reduced balance of your loan. When you have extra cash, you can paydown the principal balance and reduce your monthly payment giving you the flexibility you need to buy or refinance a home.

Interest-only Bank Statement loans free up your cash flow:

Since this type of mortgage is a more affordable way to borrow money, you’ll have the extra cash to do home improvements, pay off your debts or invest in other projects while still owning your home.

Interest-only Bank Statement loans give you time to increase your income:

Are you expecting an income increase in the next few years? Then an interest only loan can be advantageous to help you buy or refinance a home with more affordable payments.

Buying a home with a Bank Statement Loan:

Bank Statement loans allow self-employed borrowers an alternative way to qualify for a home loan. Instead of using traditional income documentation, you can qualify based on deposits to your bank statements, either personal or business.

Refinancing with a Bank Statement Loan:

Bank Statement Loans are a smart option for self-employed pros looking to refinance by allowing borrowers to qualify with deposits to personal or business bank statements in lieu of tax returns. Bank statement loans allow self-employed borrowers an easier qualifying loan solution with an affordable rate.

Whether you are considering a cash-out refinance or maybe just refinance into a low rate fixed-30-year term, this is an opportune time to do so. Take advantage of this alternative mortgage solution designed for the self-employed.

Bank Statement Loan Highlights
  • Enjoy 30-year fixed interest rates starting in the low 5’s (buydowns available)
  • Interest-only option: 40 – year fixed, 10-year interest only period (convert to P&I payment)
  • Loan amounts from $250,000 to $7 million
  • Purchase a home with little as 10% down
  • Refinance cash-out up to 85% of property value
  • Property Types: single family, condo, townhome, and 2-4 units
  • No (MI) Mortgage insurance required
  • Qualify with 12 or 24 months of bank statements



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More Content For You:

Why Bank Statement Loans for Buying a Home are on the Rise

Bank Statement Loan: How to Get Qualified for the Best Interest Rate


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About HomeLife Mortgage

For more than 25 years, HomeLife Mortgage has built a strong reputation in California and Florida as a leading mortgage broker, servicing the needs of borrowers who have been unable to obtain conventional financing.  HomeLife Mortgage is at the forefront of non-bank lending offering the next generation of mortgages including Jumbo Loans, Real Estate Investor Loans, and Bank Statement Loans.


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