If you have your own business or if you are a self-employed person, then getting a mortgage loan can be difficult for you as your income tax does not necessarily reflect your true purchasing power. But now, you can buy a home with a bank statement home loan.
There are diverse lenders who offer bank statement home loans in Houston and the surrounding area. But before you apply for the loan, you have to fulfill a few requirements. Here are these –
- 2 Years of self-employment
To get bank statement home loans, self-employed individuals need to be self-employed for at least 2 years. Though some lenders care more about this factor than others, it is important to qualify. Besides, you need to prove that you have been self-employed for a minimum of 2 years. And to do so, you should provide legal documentation stating that you operate your own business. Most of the lenders accept a business license as proof. But others ask for documents that state that you are still in the business currently. Ask your lender what their specific self-employed documentation requirements are and try to fulfill it.
- Credit score
You also need to provide your credit score to the lender to ensure bank statement loans. Unlike, some other types of loans, the credit score requirement for bank statement loans vary. While certain lenders ask for a high credit score, others approve the loan even with a 500 credit score. So, you can opt for this loan program even if struggled financially in the past. To enhance your chances of getting approval with low credit score, you should explain to the lender why your score is low. If they are convinced, they will immediately approve your loan application.
- Bank statements
As the name suggests, self-employed borrowers also have to provide their bank statements to get a bank statement loan. Be prepared with the hard copy of both your personal and business bank statements. Generally, lenders ask for 12 or 24 months of deposits. Some lenders allow self-employed individuals to use only personal bank statements while others ask for business bank statements. If you would like to use a portion of both, there are lenders, who allow the usage of both as well. Collect your statements and then decide which one can offer you the best financial reputation. And then, look for a lender, who accepts the statements that you chose.
- Down payment
Another requirement that you have to fulfill is a down payment. But unlike conventional loans, bank statement loans need a low down payment. Some lenders require down payment as low as 10% while others demand 20% down. Usually, lenders ask for higher down payments when the borrowers come with a lower credit score. If you have a poor credit score, then save for down payments as much as possible.
These are the general requirements that you have to fulfill to get a bank statement home loan. Come with the must-have things and apply for the loan shortly.
Author Bio: Joan Gallardo, a Senior Loan Officer, with 20+ years of experience, here writes on 2 questions to ask the best mortgage lender in Houston when you are about to choose one of the first time home buyer programs in Houston.