A self-employed bank statement loan is a type of loan that is based on a borrower’s income from their self-employment. Unlike traditional loans, these loans do not require pay stubs or tax returns to prove income. Instead, lenders use the borrowers bank statement to verify their self-employment income and make a loan decision.
A bank statement loan allows self-employed pros, consultants, freelancers, and independent contractors a flexible way to income qualify by using deposits to their bank statements in lieu of tax returns.
A bank statement mortgage is a type of home loan that allows self-employed borrowers to use their bank statements instead of traditional income documents like tax returns, pay stubs, and W-2s to demonstrate their ability to repay the loan. Here are some potential benefits of a bank statement mortgage:
For self-employed individuals or those who earn income from multiple sources, it can be difficult to income qualify and provide the necessary income documentation required for a traditional mortgage.
The bank statement loan lender will use the primary income earner middle credit score which must be the self-employed borrower. The co-borrower can be self-employed or a W-2 employee. Think twice about applying with a co-borrower who has a lower credit score. At the very least, pull their credit score first, as a low score can hurt your chances at a good rate. (In this case, you’d only want to include your spouse if you absolutely need their income to qualify for the loan.)
Since bank statement mortgages are designed for self-employed individuals with higher income, borrowers may be able to qualify for a larger loan amount than they would with a traditional mortgage.
Bank statement mortgages may offer better interest rates compared to other alternative mortgage options like non-prime mortgages, making it a more affordable option for borrowers.
Bank statement mortgages generally have a quicker processing time than traditional mortgages, as there are fewer documents required and the approval process is often streamlined.
Bank statement mortgages can be used for a variety of purposes, including primary residence, second homes, and investment properties, providing borrowers with greater flexibility in their real estate investment.
It’s important to work with an experienced mortgage company that specializes in bank statement loans, that has a wide selection of lenders allowing for more options to qualify and can offer the best rates and costs.
Getting pre-approved for a bank statement loan can help you gauge what interest rate you can expect – as well as determine an appropriate price range to shop in. Ready to get pre-approved for your bank statement loan? reach out to HomeLife mortgage today.
Download our free eBook to learn the ins and outs of bank statement loans and everything you need to know to apply and qualify for your loan.
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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.