It is common for homebuyers to verify their income by using tax returns and W-2s. However, not all homebuyers can prove their income in this way. A bank statement loan is a specially designed home loan program that allows self-employed individuals to get a home loan without traditional documentation. As the name suggests, one can verify the income by using bank statements.
So, if you don’t want to take the hassle of arranging several documents for getting approval for a home loan program, bank statements home loans in Houston will be the right choice for you. You can opt for any of the lenders who offer this loan and ensure approval. Do you have a few questions about this loan? Here, we have tried to resolve these –
- Who can qualify for this loan program?
Any type of self-employed professionals can opt for this program, such as entrepreneurs, business owners, gig workers, freelancers, contractors, and many other types of self-employed professionals. In case you are not sure whether you can qualify for this mortgage loan program or not, search online or get in touch with a reputable lender and ask them about this.
- What are the perks of this loan program?
Bank statement home loans come with plenty of advantages for a self-employed professional. With this loan, the lender will not look at your tax returns or the tax transcripts. Your income statements are made up of regular monthly income deposits. Besides, you can get the loan for as little as 10% down and do a cash-out refinance loan of up to 85% of the value of your property. Moreover, you can borrow up to $5 million. And typically, bank statement lenders will accept a debt to income ratio of a maximum of 55 percent.
- How income is calculated?
Income is calculated in a few different ways. If you provide a personal bank statement, 100% of the business-related deposits will be used. In case, you are using business bank statements, you can expect either 50% of the business-related-deposits or more than that if a CPA letter and profit and loss statement tie to the bank statement period.
- What bank statements do I need to come with?
For getting the approval for a bank statement home loan, you need to show at least 12 months of bank statement, but it is better if you can show 24 months as they could help you get a lower mortgage rate. An experienced lender can help you determine whether you should use your business bank statements or your personal statements. This is why it is important to work with a lender who has experience in working with self-employed borrowers. As it is not a traditional loan, not all lenders will offer it. So, be careful when choosing a lender.
You get the answer to most of your questions. Now, apply for the loan to go a step closer to your dream.