Bank statement home loans, also familiar as self-employed mortgages, allow homebuyers to secure a mortgage by using twelve months or twenty-four months of bank statements. This loan benefits self-employed professionals and small business owners, who could not show tax returns to prove their incomes. Because of the flexibility in showing proof of income, these loans are increasingly popular nowadays.
Are you also considering applying for bank statement home loans in Houston? Well, apply for this. Do you have questions about this loan that you want to be resolved? Here are a few commonly asked questions and answers on these loan programs –
- How does this loan program work?
Instead of requiring tax returns, pay stubs, W-2s, and employer verification forms, these loan applicants can use their personal or business bank accounts to prove their income, as well as cash flow.
But keep this in mind that you still need to provide some of the same documentation as you would for a regular loan. Some common requirements for bank statement loan include 24 months of personal or business bank statements, two-year history as a self-employed professional, decent credit card, enough cash to cover several months worth mortgage payment, verification of any liquid assets, a business license, if applicable, and more.
The exact requirements can vary from lenders to lenders. So, you should ask the lenders about the requirements before proceeding.
- Who can benefit from this loan?
These loans are often used by homebuyers who have the inconsistent cash flow or who can’t get income documentation from an employer, including freelancers, consultants, lawyers, doctors, small business owners, as well as real estate investors and agents.
In case you fall into any of these categories, you may not be able to qualify for a conventional or FHA home loan program. It is because the income on your tax returns that are often adjusted for deductions and business write-offs. And it might not reflect the true amount of income you are earning. However, your bank statement helps you qualify for a loan more easily.
Existing homeowners can also use this loan to refinancing their mortgages. In case you have quit the traditional workforce after purchasing your home, however, still want to enjoy the benefits of refinancing, then these loans will be the right choice for you.
- What are the advantages of this loan?
There are diverse advantages of this loan that motivates home buyers to opt for this. No tax returns, W-2s or pay stubs are required. Besides, high debt-to-income ratios are allowed. You will enjoy high loan limits. Besides, this loan can be used on primary residences, second homes and investment purchases.
As you get the answers to most of your questions, now, opt for the lenders who offer bank statement home loans and apply for this loan today!