A bank statement loan is often an excellent option for qualified self-employed borrowers. However, self-employed borrowers must choose the best loan product to help fulfill their mortgage needs.
Bank statement loans are a variety of non-qualified mortgage loans that let you qualify based on bank statements instead of tax returns. The lender will require the borrowers to provide a certain number of months' worth of bank statements to demonstrate their ability to repay the loan. This allows self-employed borrowers to access home loans, even if their taxes don't signify their total income. Bank statement mortgage programs are often a good option for self-employed individuals, business owners, and retirees who need an alternative income verification option.
The application procedure for a bank statement loan varies from a conventional mortgage. When you apply, you'll need to provide the lender bank statements from the past year or two instead of the past two or three months, as well as information about your business and expenses. In addition, you'll need to provide statements if you have personal and business accounts.
The type of business, the number of employees, and the business's physical location are some of the questions that bank statement lenders want to know to decide the expense factor.
Depending on your credit score, you might also need to make a bigger down payment. Generally, you may be eligible for a bank statement loan with a score as low as 620, but a 700 or higher gets you a better rate and terms.
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