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.
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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 and 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.
12-Month Bank Statement Loans For Primary Homes
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 enable 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.
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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 statements for 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 Mortgage for more details at 800-900-8569 or text us for a faster response. Or email us at contact@capitallendingnetwork.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.
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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.
In this blog, we will discuss and cover bank statement mortgages for self-employed borrowers. When stated income mortgage loans were popular before the real estate and credit crash of 2008, self-employed folks did not have a problem with financing. As long as they had a 20% down payment and just stated their incomes, mortgage applicants were guaranteed mortgage loans. Qualifying for bank statement mortgages for self-employed borrowers was extremely difficult until recently. Capital Lending Network, Inc. now has dozens of non-QM mortgage loan programs such as bank statement mortgages, no-doc loans, stated income mortgages, and countless alternative lending mortgage loan programs.
Issues Faced With Self Employed Home Buyers
Bank statement mortgages for self-employed borrowers, especially those individuals who are taking advantage of writing off as much business expenses found it next to impossible to qualify for home loans. With the introduction of NON-QM loans and Bank Statement Mortgage Loans For Self Employed Borrowers, homebuyers who are self-employed can qualify for home loans. In this article, we will cover and discuss Bank statement mortgages for self-employed borrowers.
Qualifying For Mortgages For Self-Employed Wage Earners
Homebuyers who are self-employed always had the most difficult time in obtaining mortgage loans. Self-employment comes with many benefits and being self-employed is the American dream. However, most self-employed people will take advantage of the ability to be able to write off expenses from their income tax returns. This is great for self-employed people to be able to take huge tax deductions and pay little in taxes. However, high deductions mean lower adjusted gross income which means not enough qualified income. With bank statement mortgages, federal income tax returns are not required.
- Being your own boss
- Working flexible hours
- Unlimited income potential
Writing off expenses on income taxes as well as depreciating assets, equipment, and properties.
Obstacles In Qualifying For Mortgage With Self-Employed Borrowers
However, when it comes to getting mortgage loans for self-employed borrowers, these borrowers go through many obstacles and stress due to being self-employed. A large percentage of self-employed people have been hurt by the Great Recession of 2008 and took thousands of dollars in losses.
While millions of self-employed people and businesses went bankrupt or closed their doors, other fortunate self-employed people and businesses barely survived. Some take losses year after year. For those that took major losses but survived the Great Recession of 2008, they really do not show too much income on their corporate and personal income tax returns.
Income Calculation Of Self-Employed Borrowers
When self-employed people apply for mortgage loans for self-employed individuals either to purchase a new home or to refinance their existing home, they run into major hurdles. This is because the only way they prove their income is via income tax returns. Mortgage underwriters will take the average of two years’ income tax returns as their average income for calculating the debt to income ratio.
How Do Mortgage Underwriters Calculate Income From Income Tax Returns
Here is how mortgage underwriters calculate income from tax returns:
- If the self-employed borrower had the same or increasing adjusted gross income for the past two years, the underwriter will average the two years tax returns.
- The monthly gross income will be an average of 12 months.
If the self-employed borrower had declining income on the most recent tax returns, then the income from the two years of tax returns will not be averaged. The most recent year’s reduced income from the tax return will be used.
If the borrower showed a loss of $100,000 in 2018 and a profit of $120,000 for 2019, the income will be $20,000 to qualify for the mortgage. One of the many advantages of being a self-employed person is that they can write off many things like gas, food, entertainment, clothing, vehicle mileage, among other things to offset their income tax liabilities.
Using Unreimbursed Business Expenses For Paying Fewer Taxes
Self-employed folks do not pay as much income taxes. This is great because you get to keep more money in your pocket. But it is damaging when it comes to providing proof of sufficient income when it comes time to get mortgage approval. Many times we can add back depreciation to income if they own another real estate as well as other write-offs.
Adding Co-Borrowers To Bank Statement Loan
Sometimes I can structure a mortgage loan for a self-employed client by adding a co-borrower or to the mortgage loan application. If the self-employed borrower has bad credit, then I can probably just put the self-employed person’s spouse on the loan and add the self-employed person to the title. There are many creative ways I can structure a self-employed person to obtain a mortgage loan.
Self-employed borrowers who do not have a steady income stream and with irregular income are borrowers who can most benefit from our bank statement mortgages. A large percentage of our clients of Capital Lending Network, Inc. are self-employed borrowers who benefit from our Bank Statement Mortgages.
Typical Professionals Who Can Benefit From Bank Statement Mortgages
Here is the ideal borrower for Bank Statement Mortgages:
- Borrowers who are self-employed
- Borrowers who only earn seasonal income
- Borrowers who are consultants and/or promoters
- Tax-Preparer, Accountant, CPA
- Freelancers
- Artists
Self Employed Borrowers who do not have a steady income stream or consistent regular income.
How Do Bank Statement Mortgages Work?
In lieu of two years tax returns, W-2s, paycheck stubs, and other documents required to process the loan, the underwriting requirements are 12 months bank statements:
- With bank statement mortgage loans is primarily based on bank statements and a Profit and Loss Statement of the borrower’s business
- Income tax returns are not required
There Are Three Different Types Of Bank Statement Mortgages
Type # 1: Personal And Business Combined Bank Statements
- Provide the most recent 12 months bank statements
- The underwriter can request up to 24 months of bank statements
- The borrower needs to provide a Profit And Loss Statement prepared by their accountant and/or CPA
- The underwriter will carefully review the expenses stated on the Profit and Loss
- The underwriter will review and compare it to the type of business borrower is in
- The Mortgage Underwriter will cross check the P and L to the bank statements provided
- That will be the determinant of the revenue
Deposits from the bank statements need to be not less than 5% of the revenue from the Profit and Loss Statements.
Using Personal Bank Statements Versus Business Statements
Type # 2: Using Personal Bank Statements And NOT Business Bank Statements
- A profit And Loss Statement is not required
- The underwriter will only go through personal bank statements
- Need to provide the most recent 12 months’ bank statements
- The underwriter may request up to 24 months of bank statements
- Although business bank statements will not be used to credit/income qualify, three months of bank statements are required to determine the maintenance of separate bank accounts
Month income is determined by averaging the annual deposits of bank statements.
Using Business Versus Personal Bank Statements
Type # 3: Using Business Bank Statements And NOT Personal Bank Statements
- The borrower needs to provide the most recent 12 months’ business bank statements and not personal bank statements
- A Profit and Loss Statement prepared by a CPA or Accountant need to be provided
Deposits from the bank statements need to be not less than 5% of the revenue from the Profit and Loss Statements.
Overdrafts On Bank Statements
Overdrafts on bank statements are frowned upon and can disqualify borrowers from the Bank statement mortgages. It is up to the underwriter’s discretion to determine whether or not overdrafts will be allowed. No more than 3 NSF/Overdrafts are permitted. Every case of overdrafts on bank statements will be viewed on a case-by-case scenario by the underwriter and the underwriting manager has the final say.
Qualifying For Bank Statement Mortgages
Self Employed Borrowers who do not qualify for traditional government and conventional loans can now qualify with our bank statement mortgage loan program at CLN. Home Buyers who need to get qualified and get a pre-approval for a home purchase or homeowners who need to refinance their homes, please contact us at 800-900-8569 or text us for a faster response. The Team at Capital Lending Network, Inc. is available 7 days a week, evenings, weekends, and holidays.
Start The Non-QM Bank Statement Mortgage Process
If you have any mortgage-related questions or want to qualify for the 12-month bank statement mortgage loan program, please contact us at Capital Lending Network, Inc. at 800-900-8569 or text us for a faster response. Or email us at contact@capitallendingnetwork.com. The team at Capital Lending Network, Inc. is available 7 days a week, evenings, weekends, and holidays.