Non-QM Highlight: Bank Statement Loan Financing

Are you self-employed? A gig economy worker? Perhaps you generate income from investments rather than a salary. If so, or if you have similar non-traditional income, the standard approval process of a traditional mortgage may not suit your unique situation. But a bank statement mortgage may be a great fit.

It’s as Simple as Bank Statements

It’s right there in the name – Non-QM Bank Statement loans really do rely on bank statements and little else. Tax returns? Pay stubs? W-2s? Nope, nope, and nope – potential borrowers with at least one year of self-employment just need to provide either 12 or 24 months of bank statements, from either personal or business accounts. Lenders then look at bank deposits to determine one’s usable monthly income and calculate the borrower’s DTI (debt-to-income ratio). Plus, a loan originator may ask for a letter from a CPA verifying your financial situation.

Who qualifies for bank statement loans?

While it varies by borrower, you’ll want to have a good credit score and a reliable financial history. Potential borrowers with low DTIs (below 45 percent is best) and high monthly incomes stand the best chances of getting bank statement loans with favorable terms.

Are bank statement loans only for primary residences?

No. Available with both adjustable and fixed-rate mortgages, bank statement loans can be used for second homes and investment properties as well; refinancing and cash-out programs may even be possible using bank statements for income qualification.

What are some of the requirements of bank statement mortgages?

As with some traditional mortgages, PMI (private mortgage insurance) may be needed if the borrower puts down less than 20 percent on the home they buy. It is a common requirement to put down from 10 to 20 percent with bank statement loans, which often carry higher risks for lenders compared to conventional mortgage loans that may allow lower down payment options.

If you’re among the around 16 million Americans who are self-employed, a Simple Access® Non-QM Bank Statement loan may be right for you. Connect with one of our lending specialists to learn more with a free consultation.