If You're Self-Employed, Look for This Special Mortgage
A "bank statement loan" is designed for freelancers, self-employed workers, gig workers, or anyone who doesn't receive a W-2 statement from an employer. But freelancers and self-employed workers don't receive W-2 statements because they aren't paid a salary from a full-time job. They instead receive individual payments from a variety of clients and typically receive a 1099-MISC form. Because they don't receive W-2 statements, they can't submit them to lenders to verify their incomes. That's where bank statement loans come in. A bank statement loan requires that borrowers only provide copies of their bank statements when applying for a mortgage. They don't have to provide W-2 forms. This makes them perfect for non-salaried workers.
How Bank Statement Loans Work
Lenders will use copies of your bank statements to verify that you earn enough income each month to afford your mortgage payment. They'll also study these statements to make sure that your account balances are consistent enough so that you can make your payment each month. They are looking for balances that are consistently high enough to cover your mortgage payment. Lenders vary, but most will want to see copies of your last 12 to 24 months of bank account statements. That way, they can get a more accurate picture of your finances.
What Else do you Need to Qualify for a Bank Statement Loan?
You'll also need a solid three-digit FICO credit score to qualify for a bank statement loan. This varies, too, by lender, but many will require a credit score of at least 700.
Lenders might also require a larger down payment.
Don't be surprised, either, if your lender charges a higher interest rate for a bank statement loan.
This document is designed for general information only. The information presented in this document should not be construed to be formal legal or tax advice nor the formation of a lawyer/client relationship.
For more information on this and other topics, please contact Kevin via any of the channels listed below:
📧 kevin@kmckernan.com | 📞 718-317-5007