The Bank Statement Loan Program
Many self-employed people can agree that tax returns don't really show their true income. They tend to write off many expenses that a salaried professional is not able to do. As a result, their 1040 adjusted income to qualify for a mortgage can be difficult. As an alternative, some lenders offer the bank statement mortgage as a financing solution without tax returns.
Variations of the Bank Statement Home Loan
12 Month Bank Statement Loan Program
Borrower(s) provide to the lender their most recent 12 months of personal bank statements showing deposits from work. Update: 7/3/2017 - Business statements may now be used.
24 Month Program
Borrower(s) will need to furnish 24 months of bank statements (personal or business) dating back from the last statement received. Example, if we are in the middle of April, then you'd provide 24 months back starting with your March statement.
The 6-month program only allows personal bank statements to be used. Your middle credit score should be 720 or higher and maximum loan to value is 70 percent. The more months you can provide, the better interest rate you'll get. By providing 24 months, you'll usually get a better rate than a 12 or 6 month program.
Qualifying for the Bank Statement Program
This loan product is currently only available to a self-employed borrower or for two borrowers where one or more of the borrowers is self-employed for the last two years. This is a great solution for commissioned and 1099'd borrowers who don't want to provide tax returns or sign IRS form 4506-T. You simply need to show proof of income by providing 12 to 24 consecutive months of bank statements.
Qualifying Income & Credit Scores
A self-employed borrower may calculate their income by averaging 100% of work-related deposits from their most recent 12 months of personal and/or business bank statements. If your statements show low deposits one month and large the next month, the underwriter may request and additional 12 months to confirm your monthly income normally fluctuates.
The maximum Debt to Income Ratio (DTI) is 50%. Borrowers with a DTI of 43 or less receive a better rate & pricing.
Minimum Credit Scores Needed (12 and 24 month program)
Purchase or Refinance: 680 or higher middle FICO scores; up to 85% financing depending on appraised value
** Credit Scores of 620-679 are available at lower LTV and higher interest rates
Refinance with cash back: 680+ credit = 75% financing;
Required Self-employment Documentation
The self employed person will need to provide a copy of their business license showing they have been self-employed the most recent two years OR have a licensed CPA or enrolled IRS agent write a letter confirming the same.
Reserves: 3 months; If loan amount is over $1 million, then 6 months, IF over $2M then 12 months.
Acceptable Properties and Usage
Single family homes, townhomes, condos, condotel, duplex, triple or fourplex all qualify on various programs.
Property usage can be as primary residence, second home, or rental property but the loan to value limits will be reduced for investment property financing.
Which States is this Available for?
We can offer financing for borrowers seeking financing in Arizona, California, Colorado, Florida, Georgia, Illinois, Idaho, Maryland, North Carolina, Oregon, South Carolina, Washington, Tennessee, and Texas.
These alternative income verification loans are not difficult when using an experienced loan officer.
Offered on a Fixed-Rate or Adjustable-rate Mortgage: 5, 7, or 10 year ARM and 30 Year Fixed
- Available on: Purchase, Refinance, or Refinance with cash back at lower loan to value
- 85% financing up to $1,500,000* 90% with 740 credit scores
- 80% financing up to $2,000,000*
- Loan amounts as high as $3,000,000 with 75% financing (75 LTV on a cash out)
What is the ADVANTAGE?
No Tax Returns and No 4506-T signing. With the Bank Statement Loan program, your income is not reduced by tax deductions.
Why other lenders may have turned you down
1.) - Some lenders have business bank statement programs where they automatically reduce the income by 50% or more, so you may not qualify. Yes, that makes no sense because everybody doesn't have 50% expenses.
Fortunately, we have (2) programs that allow more flexibility; one uses 100% of work deposits in a business account and the other program reduces it by approximately 10%. We understand that self-employed freelancers or commissioned agents don't have expenses of 50% of their income every month.
2.) - Some lenders won't allow you to use 2 or more bank acccounts. We have a program that does allow 2 or more accounts to be used for income.
**Last updated April 2017 (must be personal account for 85% )
Omni's main office is based in Southwest Riverside county so they can conveniently help borrowers in nearby Orange County, Los Angeles, San Diego, Ventura and throughout California with a bank statement mortgage.