Can You Use Bank Statements As Proof of Income For Mortgage?
12-Month Bank Statement Mortgage For Self-Deposit Wage Earners is a home mortgage program that benefits homebuyers who are self-employed entrepreneurs. Federal income tax returns and/or W-2s are not required. The income is calculated with bank statement deposits over 12 or 24 months.
Business Owners Benefit From 12-Month Bank Statement Mortgage
12-Month Bank Statement Mortgage is ideal for business owners or self-employed borrowers who cannot qualify for a home. mortgage due to the large unreimbursed business expenses they deduct from the gross income on their federal income tax returns.
The Importance Of Income On Traditional Loans: CLN Mortgage Now Has No-Doc Loans
Mortgage underwriters will use the adjusted gross income as qualified income on government and conventional loans. Adjusted gross income is the net income after all deductions. The benefits of owning your own business and/or being self-employed are being able to deduct substantial business expenses.
Unreimbursed Business Expenses
By doing so, self-employed borrowers minimize paying a lot of taxes. However, the more unreimbursed business expenses you deduct, the lower your adjusted gross income. The lower your adjusted gross income, the lower the mortgage loan amount you will qualify for. With our bank statement mortgage program at Capital Lending Network, Inc., we do not even ask for tax returns. Income is calculated with bank statement deposits.
Can I Qualify For The 12-Month Bank Statement Mortgage Program With Negative Income?
Whether you declare high income, low income, zero income, or negative income on your income tax returns, it does not matter. Our bank statement mortgage program at CLN Mortgage Group does not require tax returns from borrowers. There are instances where shrewd sharp business owners have negative income due to substantial losses on their income tax returns.
Negative Or Little Income On Income Tax Returns
Negative income on federal tax returns will automatically disqualify borrowers from qualifying for a mortgage. However, with our 12-Month Bank Statement Mortgage Loan Program at Capital Lending Network, little or negative income on tax returns does not matter.
How Do Mortgage Underwriters Calculate Qualified Income On Bank Statement Loans
As long as you have a business and/or personal bank statement and have regular monthly deposits, you are in great shape and should qualify. Only bank statement deposits are used to calculate qualified income. We will further explain how the 12-Month Bank Statement Mortgage Loan Program works in the following paragraphs. We will discuss and cover 12-Month Bank Statement Mortgage Loan Programs at Capital Lending Network, Inc.
How The Bank Statement Mortgage Loan Program Is Processed
For the Bank Statement Program, we would need either 12 months of bank statements or 24 months of bank statements. We offer 12-months and 24-months bank statement deposit loan programs. The difference between the 12 versus 24-month bank statement mortgage program is the 12 months loan program has a 0.125% higher pricing adjustment on the mortgage rate).
12 Versus 24 Month Bank Statement Mortgages
The eligibility requirements and guidelines are exactly the same with both the 12 months versus 24 months bank statement mortgage loan program. Income tax returns are not required so do not turn them in. Only the bank statement deposits will be used to calculate qualified income by mortgage underwriters. Withdrawals do not count.
Documents Required To Start The Mortgage Process
The following documents will be required to get started processing the bank statement loan program: Either 12 and/or 24 months’ worth of Bank Statements. ALL pages. This holds true even if there are blank pages in the bank statements. All pages need to be legible and original. If the pages are separate and somewhat confusing, please separate them and label them with the month and year. If it is one attachment, they must be in sequential order (Business they must own 50%+ of the business & personal they must own 25%+ of the business).
Qualified Income Of Borrowers
The loan officer needs to have the borrower complete the 1003 mortgage loan application with no income on it. The loan officer will analyze income. There are times when verification of employment may need to be done with borrowers with irregular income or who have irregular overtime income. A recent tri-merger credit report of the borrower will be pulled. The middle credit score is used as the qualifying score. A detailed bank statement questionnaire will be provided by the lender for the borrower to complete, date, and sign.
Forms That Need To Be Completed
The questionnaire is a VERY detailed description of the business so the mortgage underwriter can determine the Expense percentage. The questionnaire must be 100% accurate (if there is anything in a review that is incorrect it would be an automatic denial). With the submission to the mortgage underwriter, borrowers will need a letter from their CPA/Accountant to verify their ownership and will need the most recent full bank statements and a Month to Date statement before closing.
Calculating Income And Expenses On Bank Statement Loans
If you are using Business Bank Statements, the borrower must be at least 50% owner of the business. We will require either 12 or 24 months’ worth of bank statements. There is a business bank statement questionnaire that the borrower (not LO/processor) must complete and e-sign. The bank statement questionnaire will give a breakdown of their business. State a detail of the number of physical locations, how many employees, and what they feel the expenses that they occur for their business are as a percentage.
Mortgage Underwriting On Bank Statement Loans
The mortgage underwriter will look at that as well as other factors to determine what they will use as expenses against the business. The 4 expense % they will use are either 30%, 50%, 70%, or 90% leaving the remainder of deposits left over to determine income. If the borrower owners the business 100%, the borrower gets to use the full amount of the remaining deposits. But if they are 50% owners, then they only get to use 50%. This will then be divided by the number of months of bank statements we are using (12 or 24 bank statement deposit averages).
Case Scenario On How Income Is Calculated On The 24 And 12-Month Bank Statement Mortgage
Here is a case scenario on how income is calculated and how the bank statement mortgage program works:
Example on a 24-month bank statement mortgage income and expenses are calculated:
- $960,000 in revenues for 24 months
- Using 50% as Expenses leaves $480,000
They are 100% owner of the business:
- Take the $480,000 and divide it by 24 months
Monthly income is $20,000/month. If they were 50% owner then that would be ½ or $10,000/month.
Using Personal Bank Statements
Borrowers can use personal bank statements. If the borrower is using personal bank statements, the borrower must be at least 25% owner of the business. Or the borrower needs to be a 1099 employee. If the borrower is a 1099 wage earner, the borrower needs to have been a 1099 employee for at least two-plus years with the same employer. Apply Now!!!
How Income Is Determined On Bank Statement Mortgages
The borrower can use the bank statement questionnaire again to give a percentage of what they feel their expenses are. The mortgage underwriter would apply a certain percentage against their deposits. You can only count the deposits coming into their personal account from that business account or deposited 1099 deposits (if cash/ATM deposits, then only those). We do not allow transfers from other personal accounts.
Using A Combination Of Personal And Business Bank Accounts
If the borrowers are using their personal bank statements and they have a business account and the borrowers get 2 months’ worth of business account statements, then we will allow the borrower to use 100% of their deposits. 100% of the borrower’s deposits coming into their personal account from their business can be used as income. We will take no expenses taken out against them. If you have one borrower who is Self-Employed and their spouse who is W2, you can use both income sources. This holds true as long as the Self-Employment income makes up at least 30% of the income.
12 Versus 24 Month Bank Statement Mortgages
Capital Lending Network, Inc. offers 12 and 24 months bank statement loans for self-employed homebuyers with no income tax returns and limited documentation required. The bank statement mortgage program is for self-employed borrowers. It benefits those who show little to no income or even negative adjusted gross income due to writing off unreimbursed business expenses. Get qualified for a mortgage today!!!
How Is Qualified Income Determined On Bank Statement Mortgages
The monthly bank statement deposits over the past 12 months are averaged. The average monthly deposits over the past 12 months are the qualified income that is used for debt to income ratio calculations by the mortgage underwriter. Withdrawals do not matter. For example, if the borrower makes a $10,000 deposit every month and withdraws $9,999.00 the same day, the $10,000 deposit will be used. The withdrawal and/or balance do not matter. To qualify, the borrower needs to have been self-employed for at least two years.
Bank Statement Loans Mortgage Guidelines
Capital Lending Network, Inc. has multiple wholesale bank statement mortgages, lending partners.
Since bank statement loans are non-conforming loans, our wholesale investors can make exceptions on a per case by case basis. In general, the following terms and conditions apply to most of our bank statement mortgage loan programs. Need to be self-employed for at least two years. Provide the past twelve months’ bank statements with no bank overdrafts. There is no maximum loan limit. The minimum down payment required is a 10% down payment.
Non-QM Down Payment Requirements
The lower your credit scores, the larger the down payment that is required. There is no private mortgage insurance required on all non-QM and bank statement loans for self-employed borrowers. Mortgage rates mainly depend on the combination of the borrower’s credit scores and the down payment. Bank statement mortgage loans are for owner-occupant primary homes, second homes, and investment properties. Minimum credit score requirements of 620 FICO. Timely rental and/or housing payments in the past 12 months. Minimum of 3 credit tradelines that have been seasoned for at least 12 months. The bank statement loan program is one of the most popular at Capital Lending Network, Inc.
Non-QM Bank Statement Loans Versus Traditional Jumbo Mortgages
Self-employed homebuyers now have the opportunity to purchase a high-end home without worries about qualifying for a Jumbo mortgage. Traditional Jumbo lenders consider high-end homes as high risk. Many will require a 40% debt to income ratio cap and impeccable credit and a 740 credit score. They will use the adjusted gross income of the self-employed borrower. Our non-QM bank statement loan program has a minimum credit score requirement of 620 FICO.
Adjusted Gross Income Versus Bank Statement Deposits As Qualified Income
Most self-employed wage earners take advantage of the tax benefits which enables them to pay less in taxes. However, this often hurts when they apply for a mortgage. With the bank statement loan program for self-employed borrowers, self-employed borrowers can now qualify for a Jumbo bank statement loan without the need to worry about qualified income. Your deposits will be used to c qualified income.
How Does The 12 And 24 Month Bank Statement Mortgage For Self-Employed Borrowers Work
Great news for self-employed borrowers. Until non-QM and alternative mortgage loan programs were launched a few years back, self-employed homebuyers had a difficult time qualifying for a home mortgage. This was because self-employed borrowers often take substantial unreimbursed business expenses which affects the adjusted gross income. Many self-employed borrowers will have little to no adjusted gross income after deductions. Others can have a negative income.
Tax Benefits Of Self-Employed Wage Earners
Being able to take tax deductions is one of the many great benefits of being a self-employed wage earner. Unreimbursed business expenses will lower the adjusted gross income. Lower adjusted gross income means the taxpayer will pay less in federal income taxes. However, tax deductions mean lower income taxes paid but it is not good when it comes to qualifying for a mortgage.
Limited Documents And No Income Tax Returns Required
With the bank statement mortgage loan program now available, self-employed borrowers can qualify for a 12 and 24-month bank statement mortgage loan program for self-employed borrowers with no income tax returns required. We will average either the past 12 months and/or 24 months of bank statement deposits and use that average as the monthly qualified income. Withdrawals do not count. Bank statement mortgage loan programs have become a very popular loan program among self-employed borrowers. In this article, we will discuss and cover 12 And 24 Month Bank Statement Mortgage For Self-Employed Home Buyers.
Bank Statement Loan Program Explained
Capital Lending Network, Inc. now offers 12 And 24 Month Bank Statement Mortgage for self-employed borrowers:
- No income tax returns are required
- No private mortgage insurance is required
- There are no maximum loan limits
- Self-employed borrowers had a difficult time qualifying for home mortgages since the 2008 Housing Bubble Collapse due to taxable income making it difficult in qualifying for traditional government and conforming loans
- Our 12 and 24-month bank statement mortgage now makes the dream of homeownership possible for self-employed borrowers
- Many entrepreneurs who could have afforded higher-end homes have been renting until now
With the launch of the 12 And 24 Month Bank Statement Mortgage Program at CLN Mortgage, business owners can now qualify for home mortgages using their bank statements.
How Is Income Calculated With Bank Statement Mortgage
On 12 and 24 months Bank Statement Mortgage Loan Programs, income is calculated by adding total deposits of either 12 and/or 24 months and averaging it by either 12 and/or 24 months. The average monthly deposit will be the qualifying monthly gross income. Withdrawals do not count. Some investors may allow 100% of the deposits to be used on personal bank statements. Some investors may only allow 50% to 70% of the deposit to be used on business bank statements. It depends on the individual lenders and/or investor and case scenario.
How Bank Statement Mortgage Lenders Process And Underwrite Loans
Bank Statement Mortgage Underwriting is rather streamlined and simple. Loan Officers need to gather borrowers’ bank statements. Underwriters will go by the ending balance of monthly bank statements.
Here is what underwriters will analyze and review when processing and underwriting bank statement mortgage borrowers:
- All Pages Of Monthly Bank Statements And Ending Balances
- Regular Deposits, Withdrawals, Overdrafts, Ending Balances With Special Emphasis On Deposits
- Irregular, Unique, And Large Deposits
- Account Transfers, Bank Wires, ATM Advances, Abnormal Activities
Asset Depletion Mortgage Program
Capital Lending Network, Inc. offers an asset depletion bank statement mortgage loan program. Asset depletion can be used as qualified income with our bank statement mortgage for self-employed borrowers. The following assets of self-employed borrowers can qualify for our asset depletion loan program. Asset conversion can be used for qualifying income. Qualified assets for asset depletion can be the following:
- Liquid Stocks
- Liquideable Bonds
- Mutual Funds
- Retirement accounts such as 401k
- Savings/Checking Accounts
Depending on the loan program and investor, there is a conversion chart on the percentage of the asset that can be converted to income. Please contact us at CLN Morgage for more details at 800-900-8569 or text us for a faster response. Or email us at email@example.com .
NON-QM Bank Statement Loans
All Bank Statement Loans are non-QM loans. They are not Qualified Mortgages. There is no waiting period after a housing event and/or bankruptcy discharge date to qualify for non-QM loans. 10% to 20% down payment is required. Down payment requirements depends on borrowers’ credit scores.
Non-QM Mortgage Rates
Mortgage rates are dependent on down payment and credit scores. Need verification of rent for the past 12 months with no late payments in the past 12 months. Borrowers can qualify during Chapter 13 Bankruptcy repayment but need to have been in the repayment for at least 12 months. Need approval of Chapter 13 Bankruptcy Trustee. Need to have been self-employed for at least 2 years. 3 credit tradelines seasoned for at least 12 months. The bank statement needs to be from the same bank.
Start The Non-QM Bank Statement Mortgage Process
To qualify for the 12-month bank statement mortgage loan program, please contact us at Capital Lending Network, Inc. . The team at Capital Lending Network, Inc. is available 7 days a week, evenings, weekends, and holidays. Please don’t hesitate to reach out to us at Capital Lending Network, Inc. at 800-900-8569 to discuss helping you get qualified for our bank statement mortgage loan program. Text us for a faster response. Or email us at firstname.lastname@example.org . The team at CLN Mortgage is available 7 days a week, evenings, weekends, and holidays.