Bank Statement Loan (No Tax Returns, W-2s and Paycheck Stubs)
With a bank statement loan the borrower is not required to provide the typical financial income documents needed for a mortgage, such as W-2s and tax returns. Instead, you’ll use bank statements to prove income. Your bank statement will also be able to summarize how much money you have in your account and will also show you a list of all activities throughout a particular period, including deposits and withdrawals. This can be helpful if your income is inconsistent, your employer doesn’t issue traditional pay checks or you claim significant tax deductions.
When you apply, you’ll provide bank statements from the past year or two years, instead of the past two months or three months, as well as information about your business (such as profit and loss statements) and expenses. If you have personal and business accounts, you’ll need to provide statements for both.
No Tax Returns, W-2s and Paycheck Stubs
Unlike conventional loans, where you would need to provide your tax returns, W-2s, and pay stubs to prove your income, you don’t need these to secure a bank statement mortgage loan. Instead, all you need is 12 months worth of bank statements, which may vary based on the lender.
Some of the paperwork you may require for a bank statement loan includes the following:
- 12 months worth of personal bank statements and business bank statements
- Two years history of self-employment
- LLCs, partnerships, or corporations (may qualify for vesting only)
- Trusts or Land Trusts (trusts may qualify for ownership vesting only)
- Business license
- Decent credit score
- Low debt-to-income (DTI) ratio.
- Up to 90% LTV
- Enough cash to cover months of mortgage payments
- Proof of any liquid assets, such as retirement accounts
- Gift fund are allowed on certain LTV’s
Since a bank statement loan program presents a huge risk to lenders, you’ll need to make a larger down payment than what you would for traditional loans. Plus, you may end up paying higher interest rates.
You should get a bank statement loan if you actually have the income that qualifies for a traditional loan. These mortgages typically carry a higher interest rate, and it’s not uncommon for them to have a prepayment penalty. These loans are used for Primary and Second home only. If you want to purchase or refinance an investment property, check out our DSCR loan products.
The Parham Team believes in educating and engaging our customers throughout the loan process. We look forward to hearing from you to begin that process. Contact us today at 855-326-6802 or schedule a call with a Loan Specialist.