Are you a business owner or a self-employed freelancer, who wants to buy a house or refinance the existing house? Is it difficult for you to qualify for a traditional home loan program as you are a self-employed person and you don’t have a salaried income? Then, bank statement home loan programs will be the ultimate choice for you. This type of non-conventional loan allowed self-employed business people to get a loan in a relatively easy way.
These loans have taken over the conventional stated income loans as an alternative for borrowers who are not able to verify their income in a conventional way by providing the previous two years tax returns, W2s and pay stubs. As the name implies, a bank statement loan allows the borrower to verify his or her income with bank statements. But before you opt for bank statement home loans in Houston, you would like to know more about the loan program. Here we have put together the most important things for you.
- Key requirements for this loan program
When you are preparing to apply for a bank statement home loan, you have to fulfill the main requirements. You should have been a business owner or a self-employed person for at least two years and at least 10% down (that is a 90% loan to value), and a 25% down payment for one-month bank statements. Moreover, you should have four months of PITI reserves in the bank for loan amounts under $1 million and six months for loan amounts over $1 million and a credit score of 620 or above to qualify. The maximum loan is $5,000,000 and the minimum loan amount is $100,000.
- Different bank statement loan documentation options
In case you are applying for a 12 to 24 months bank statement loan, your personal bank stemmers could qualify you or you can use business bank statements. In case you are applying for a one-month bank statement loan, you may qualify with your most recent bank statement. It must be from an account that shows a positive balance. And you should be able to attest and declare your qualifying income.
- Special considerations for this loan
There are some important things that you should consider when applying for the loan program. You can use statements from more than one bank account, but they can’t be a combination of personal and business accounts. Deposits that are transferred from a business account into a personal account are acceptable. You may combine W2 income with bank statement income until the income is not being double-counted. There is no commingling of funds. There are the special considerations that come with the loan.
- Loan application process
In order to apply for a bank statement loan, you can upload the last 12 to 24 month’s worth of bank statements from a business account into the system or use another method to pull the information from your account. These kinds of loans are processed through a manual underwriting process. As these loans are being reviewed by a person, they can take from 21 to 30 days to process. In more complex cases, it may take up to 45 to 60 days.
As now, you have a basic view of this loan program; it will be easy for you to opt for this mortgage loan. If you want to know more, opt for a mortgage lender or check online today.
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.