Bank Statement Mortgage Loans For Self-Employed Borrowers

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In this article, we will cover bank statement mortgage loans for self-employed borrowers. For years, many self-employed borrowers and business owners had a difficult time qualifying for a mortgage. Many self-employed borrowers can easily afford the down payment and the housing payment. However, in many instances, self-employed borrowers could not meet the qualifying income to qualify for a mortgage.

Homebuyers who are business owners or self-employed can qualify for bank statement mortgage loans with no income tax required. Lenders will use the average deposit over the past 12 months. The average of the 12 months of deposits will be the qualifying income. Withdrawals do not matter. Bank statement mortgage loans are very straightforward. Each non-QM wholesale lender has their own lending requirements on non-QM loans.

Non-QM mortgage loans cover bank statement mortgage loans and other no income verification mortgages. Some of the most popular non-QM mortgage loan options besides bank statement mortgage loans includes no-doc mortgages, stated-income loans, asset-depletion, DSCR mortgage loans, one year 1099 income only mortgages, P and L mortgage loans, and dozens of other non-QM loans with no income verification required loan programs.

Non-QM Mortgage Loans For Self-Employed Borrowers

Self-employed borrowers could not qualify for a mortgage because they often take advantage of the IRS tax loophole in being able to write off unreimbursed business expenses. Lenders use adjusted gross income.

Besides bank statement mortgage loans, there are dozens of no-income verification mortgages available for self-employed borrowers. Non-QM loans are for primary, second, and investment homes.

The adjusted gross income is the gross income less the unreimbursed business expenses. There are instances when borrowers will end up with very little or negative adjusted gross income. Now, with the bank statement mortgage loans for self-employed borrowers, self-employed borrowers are eligible to qualify for a mortgage.

How Does Bank Statement mortgage Loans For Self-Employed Borrowers Work?

Bank statement mortgage loans is a form of non-QM loans. Non-QM loans are alternative lending program. Non-QM loans are also referred to as non-conforming loans. These loans do not conform to any government or conforming lending guidelines. Each Non-QM wholesale mortgage lender has their own lending requirements. Non-QM lenders are normally wholesale lenders and develop lending relationships with mortgage brokers.

There are hundreds of non-QM loan programs available today. FHA Bad Credit Lenders, empowered by NEXA Mortgage, LLC, is licensed in 48 states including Washington, DC. FHA Bad Credit Lenders is the nations largest non-QM mortgage broker with lending partnerships of over 210 wholesale mortgage lenders. FHA Bad Credit Lenders has every non-QM loan program available in today’s marketplace.

There are instances where non-QM lenders will develop non-delegated correspondent lending relationships with mortgage bankers or mini-correspondent lenders. Non-QM loans are often held by the lender in their portfolio or sold to a private secondary market. Non-QM loans can be sold to institutional investors, insurance companies, hedge funds, money managers, and large financial institutions. Non-QM lending is a huge niche in today’s real estate and mortgage markets.

How Is Qualified Income Calculated on Bank Statement mortgage Loans?

Qualified income on bank statement mortgage loans is calculated by adding all the bank deposits for the past twelve months and averaging the 12 months of deposits. The average of the 12 months of deposits is the qualified income and used for debt-to-income ratio calculations. Withdrawals does not matter.

Bank statement mortgage loans are ideal for business owners and self-employed borrowers with a lot of unreimbursed business expenses. Only bank deposits over the past twelve months are used to get qualified income. Withdrawals does not matter. FHA Bad Credit Lenders can qualify for bank statement mortgage loans with credit scores down to 500 FICO.

If you were to make a $10,000 bank deposit and withdrawal $9,999.99 the next day, that is fine. Only the $10,000 deposit count. In most cases. NON-QM lenders will allow up to a 50% back-end debt-to-income ratio on bank statement mortgage loans.  Income tax returns are not required and you cannot submit tax returns. Borrowers can use business or personal bank accounts. There are instances where we can use both business and personal bank accounts.

What Are The Eligibility Requirements For Bank Statement Mortgage Loans

Self-employed borrowers, business owners, entrepreneurs, and 1099 wage earners can qualify for bank statement mortgage loans with no income tax returns. The minimum credit score required for bank statement mortgage loans is 620 FICO with a 20% down payment. You can put a 15% down payment with a 680 credit score. Borrowers with a 720 credit score can put a 10% down payment.

The minimum credit score for bank statement mortgage loans is 620 FICO with a 20% down payment. Homebuyers can qualify for bank statement mortgage loans with a 10% down payment with a 720 credit score. To be eligible for bank statement mortgage loans, you need verification of rent, three traditional credit tradelines seasoned for at least 12 months. Or, you can have two traditional credit tradelines seasoned for two years. Non-QM wholesale mortgage lenders will make exceptions for strong borrowers with compensating factors.

These parameters are for loan limits up to $1.5 million. Bank statement mortgage loans over $1.5 million, lenders will require an additional 10% down payment. Therefore, 620 credit score on non-QM loans higher than $1.5 million requires a 25% down payment, 680 credit score borrowers with loan balance higher than $1.5 million requires a 20% down payment and borrowers with higher than a 720 credit score require a 15% down payment.

This article on bank statement mortgage loans was updated on January 8th, 2022