Bank Statement Loans

Bank Statement Loans

Bank Statement Loans, also known as self-employed mortgages allow you to secure a mortgage without the documentation you would normally use to verify your income, such as W-2’s and tax returns.  These loans are largely used by entrepreneurs and others who might not have consistent income or find it difficult to verify their income.  A lender will determine an average of the deposits over the 12 or 24- month period to determine the applicants qualifying income for a mortgage loan.

Applicants can use their personal and/or business bank statements to prove their income and cash flow.  Applicants need to provide some of the same documentation as for a regular loan of course and often more.

The typical requirements are:

• 12 to 24 months of personal or business bank statements
• Two-year history as a self- employed professional
• A fair to good credit score. (score varies by lender)
• Applicant’s business license, if applicable
• A letter or profit and loss statement from an accountant verifying your expenses and that you file your tax returns

An important aspect of this loan is how deposits are made to the bank account as they will have to be sourced.  If the borrower receives payments for services through cash deposits, checks or credit card payments these are relatively easy to source.  If the borrower is receiving payments through third-party sites such as PayPal, Venmo or other popular applications the paying customer needs to note in the payment that it is for services or products rendered by the company.