Have you ever heard of a bank statement home loan? If you own a business, this may sound familiar. Before the housing market crashed many small business owners were obtaining a mortgage loan using their bank statements to qualify instead of pay stubs and tax returns. This type of stated income loan went away virtually overnight, leaving many business owners stuck with their current home mortgages.
Bank Statement Loans Are Back!
This is excellent news for small business owners and employees that receive a lot of their income from commissions. Whether you are a realtor, own a plumbing company, or a financial adviser, you can use this type of loan program to qualify for a mortgage loan you would normally be declined for.
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How a Stated Income Loan Can Help You
Tax returns are a good way to document income for people that have a “normal” W-2 job. For everyone else, tax returns don’t tell the entire story. With write offs like mileage, meals and entertainment, and home office expense, your final taxable income is often only a portion of what you actually make. When an underwriter uses that figure, it causes many borrowers to be declined or qualify for a lower loan amount. A bank statement can show your true income by using the total deposits that go into your account on a monthly basis.
Some people that benefit from a bank statement loan are:
• Small Business Owners
• 1099 Contractors
• Real Estate Agents
• Sales People that Make High Commissions
• People With Second Jobs or a Side Business
How Does a Bank Statement Loan Work?
Your mortgage lender will typically ask for twelve to twenty four months of bank statements. It should be statements for the same account number. The underwriter will look at the total deposits made into your business account on a monthly basis. They add up the deposits over the entire period and divide by the number of months to get your average monthly income. In most cases,this is significantly more than the taxable income showing on your tax returns.
Refinance or Buy a Home Using a Stated Income Loan
This loan program can help you to purchase a home or to refinance. That is fantastic news for self-employed borrowers that have been waiting to be able to purchase a home. You still need to have good credit and your mortgage lender will let you know how large of a down payment you need to make based on your loan application.
There are additional programs that allow you to refinance without showing your income documentation. These include the FHA Streamline Refinance Program and the VA’s Interest Rate Reduction Loan. In order to qualify for these programs,you need to have an existing FHA or VA loan. If you do, contact an FHA approved lender or VA approved lender to discuss how much money you can save on a monthly basis.
Now is an excellent time to take advantage of the bank statement loan program. There is no way to tell how long the program will be available or if it will disappear again. Act fast and purchase your dream home using this innovative loan program and low mortgage interest rates.
