Bank Statement Mortgage Program
Use your bank deposits as income to qualify as a self employed borrower!Bank Statement Mortgage Program
The lending industry has developed a bank statement mortgage program that make it easier for self employed individuals in the workforce to qualify for a mortgage. We all know that it makes sense to deduct all of the expenses you can to avoid paying taxes unnecessarily. The problem is that oftentimes once a business owner or sole proprietor has taken advantage of every tax write off available to them, the net income that shows on their tax returns is no longer sufficient to qualify for a home that they feel they can afford and desire. Bank statement mortgage programs are a great remedy for this situation, because we completely take the tax returns out of the picture.
We don’t want to see the tax returns! The borrowers income is derived from the deposits that go into either their personal bank account or their business bank account. It’s important to note that the debits, withdrawals, and deductions from the account are not accounted for, only the deposits.
What Does My Credit Score Need to Be?
Your credit score for a bank statement mortgage program will dictate two things. How much of a down payment will be required, and what your interest rate will be. The minimum credit score requirement is a 575 middle score, and with a 575 credit score your minimum down payment would be 30%. However with a credit score of 680 your minimum down payment would be 10%. The great thing about these programs is that even in the case you aren’t putting down 20%, you don’t have any additional mortgage insurance to pay. With conventional financing you would need 20% down to remove any mortgage insurance requirements.
Even though the rates for these programs are higher than conforming financing there are still some perks. The main perk being you don’t have to pay more taxes than you should to qualify for the home you want! Of course like other programs the higher your credit score the lower your interest rate will be for a bank statement mortgage program.
You Have to Be Self Employed
To utilize a bank statement mortgage program you need to be self employed. That means either you have a an S corporation a C-corporation, an LLC or you are a sole proprietor. Additionally, you also need to have been self employed at least two years. In some cases we can get 1 year of self employment approved. In order for us to verify that you have been self employed we need to show that a business has been incorporated for that long through the state or that you have held a license of some sort within your industry.
We can typically verify this through the online state business record website that you are incorporated in. Additionally a letter from your CPA stating how long you have been self employed would suffice. Remember we are not looking at your tax returns, because we are only using the deposits in your bank account.
How Is My Income Calculated?
Your income is calculated using a factor of your total deposits averaging over 12 to 24 months. That factor can be anywhere from 50% of total deposits to 90% of the total deposits. Large one time deposits or transfers coming from another account would need to be sourced. The factor varies by the line of work you are in and the makeup of your company. For instance if you have a million dollars of deposits coming into your account each month but you have a 100 employees, that would have an impact on how much of the deposits we can use for income. The minimum is 50% of your monthly deposit average. If you are in a line of work that allows you to work from home and you have minimal expenses for your line of work up to 90% of your deposits can be used for income. Using 24 months of bank statements can help lower your interest rate.
What Else Do I Need to Know About Bank Statement Mortgage Programs?
Bank statement mortgage programs are a little different than our standard mortgage programs but in no way are they inferior. The truth is paying a little more for an interest rate can be cheaper than paying Uncle Sam. The savings on your tax returns might easily outweigh the higher rate you would pay with a bank statement program. However, its a great loan program but there’s a few caveats to keep in mind. If you want to finance a manufactured home with the program its going to require at least 30% down. The minimum loan amount is $150,000 on most bank statement mortgage programs. With exception a $100,000 might be possible. Income producing farms are difficult to finance as well. We may have other products that can work.
Frequently Asked Questions about our Bank Statement Mortgage Program
- Can I have a w-2 co-borrower on my loan and use their income? YES!
- Can I also have w-2 income as a second job and use that income? YES!
- Can I buy a second home with a bank statement program? YES!
- What is the minimum credit score? 575! (a larger down payment is required)
- Do I need to show reserves after my cash to close for down payment and closing costs? With 25% down!
- Can I use multiple business accounts? YES!
- Can I purchase a condo with a bank statement mortgage program? YES!
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Keith Meredith
Feel free to call or text message me directly at +1 (352) 615-1613 with any questions on any loan programs, credit score requirements or interest rates. 
