When applying for a mortgage, you’ll usually be asked to provide your W-2. However, for homebuyers without traditional employment situations, the path to homeownership can be filled with obstacles. That’s where a bank statement loan comes into play and makes it possible to get a mortgage without tax returns. In this post, we’ll explore this type of loan, the benefits, and what you need to qualify for a bank statement loan.
What is a Bank Statement Loan?
A bank statement loan is a type of home loan available to homebuyers with difficult-to-document or non-traditional incomes. These include self-employed people, freelancers, investors, business owners, or those who earn a large portion of their income from tips.
So, instead of using tax returns as proof of income, you will use personal and business bank statements to prove you have enough income to make mortgage payments.
The Benefits of a Bank Statement Loan
When applying for a bank statement loan, you can look forward to the following benefits:
- Easier document requirements. Instead of submitting at least two years of W-2 forms and tax returns, the application process is simplified by requiring bank statements, which are easy to get from your bank.
- Flexibility. Unlike conventional mortgages, bank statement loan lenders may offer more flexibility in eligibility requirements. For example, you might not need a high credit score. In fact, some lenders will accept credit scores as low as 620. Just remember, this means you may end up with higher mortgage rates!
- Higher loan limits. With a bank statement loan, you may find that you’re able to take out a bigger loan than you would with a conventional loan.
How to Qualify for a Bank Statement Loan
To apply for this loan type, you need to meet the following requirements:
- You need to be able to provide at least two years of bank statements (there is no specific income amount you need to qualify)
- Prove that you have adequate cash reserves or liquid assets
- Have a credit score of at least 620
- Have a debt-to-income ratio (DTI) of 45% and less
- Be able to make a down payment of 10% or more
Apply for a Bank Statement Loan in Oakhurst or Beyond
Are you ready to purchase your dream home with the help of a bank statement loan? Contact our friendly team at Granite West Funding to guide you through the loan application from start to finish. Schedule your consultation by calling us at (559) 540-2275.
