Bank Statement Mortgage Loans for Self-Employed

We allow borrowers to use 12 or 24 months of bank statements in place of tax returns to prove that they have good cash flow.

These alternative documentation loans are also known as non-qualified mortgages (non-QM) or cash flow mortgage loans. Unlike stated income loans, which rely on a borrower’s stated income without verification (also referred to as “liar loans”), bank statement loans use the borrower’s actual bank statements to verify income. Bank statement mortgage loan rates are typically higher than if you provided 2 years of tax returns, however most do not require mortgage insurance so there is a bit of an offset to the higher rates.

Bank statement mortgage loans for self-employed people provide a flexible solution for those who struggle to provide proof of income through traditional means. These loans are also useful for those who have a more unconventional income stream, such as freelance work, 1099 income or multiple businesses.

Bank statement loan requirements vary but if you are a business owner or a self-employed individual or one who receives 1099 pay, or if your income taxes don’t show enough income then a bank statement loan may be right for you. With these loans, you can use your personal or business bank statements to prove your income and secure the financing you need to purchase a home. Bank Statement Mortgages are an awesome tool!

Typically, you will need to prove a full 24 months of self-employment, however, 12 months may be allowed in some cases.

Primary Residence – 10% down (90LTV). 720 minimum score. Lower credit scores are allowed with more down payment.
Second Home and Rental Properties require 20% down minimum.
We can also do refinances with bank statements.

3 to 6 months of the new payment amount must be in your bank, retirement or stock account as “reserves” at close of escrow. Higher loan amounts may require more reserves.

Maximum DTI (debt to income ratio) 50% Full Appraisal is required. You must have a good payment history of renting or a rent free letter is required when a paid rental history is not applicable Gift funds are allowed for funds to close, although Applicant must have some of their own money. The business must have a minimum two-year operating history with one of the following; a letter from either the businesses tax professional, regulatory agency or licensing bureau, certifying two-years of self-employment in same business. Verify that the business is active and operating. Borrowers must own a minimum of 25% of business to be considered self-employed.

Self Employed/Wage Earner Combination – A Co-Applicant who is a W2 employee may be on the loan with a self-employed borrower. Property Types: Eligible: Single Family Residences, 1-4 Units, PUDs, Townhouses, Condominiums. Ineligible: • Acreage greater than 10 acres (appraisal must include total acreage) • Agricultural zoned property • Condo hotel • Co-ops • Hobby Farms • Income producing properties with acreage • Leaseholds • Log Homes • Manufactured housing • Mixed use properties • Modular homes

Loans with just one-year of tax return loans are also available with 15% down. This is NOT a “stated income” loan. You must prove that you can afford the payment using bank statements to show good cash flow.

Whether you call it a self-employed mortgage, mortgage for business owners, or a self-employed home loan, this is not a stated income mortgage. Although I do offer all types of mortgage loans, many happy clients use me as their only self-employed mortgage lender. The self-employed mortgage requirements are a credit score minimum of 620 and 2-years of self-employment.