For self-employed home buyers, the process of finding a mortgage can seem like a huge challenge. After all, most traditional home loans require proof of steady employment and a consistent stream of income. But did you know there is an alternative home financing solution that business owners and 1099 income earners can take advantage of?
In today’s post, we’ll introduce you to the Bank Statement Qualifier mortgage, a unique loan product that allows borrowers to use their bank statements to qualify for financing, instead of traditional income and employment documentation. We’ll also offer a few other options for self-employed home buyers looking for a mortgage and give you a few helpful hints on how to find the right loan for your needs.
Bank Statement Qualifier Mortgage
The Bank Statement Qualifier from Luxury Mortgage is an innovative loan solution designed to help home buyers obtain financing who otherwise may not qualify for loans that require traditional income and employment verification. In simpler terms, if you’re a business owner, a freelancer, self-employed, a contractor, an investor or a 1099 earner, this loan could be ideal for you.
With the Bank Statement Qualifier mortgage, borrowers may use bank statements to qualify for the loan instead of providing employment and income documentation in the form of W-2s or tax returns. Since this loan allows for qualification based on balance deposits, the borrower need only show documentation that there are appropriate funds being deposited to their business and/or personal bank accounts (in addition to other standard qualifying guidelines).
Here’s a brief explanation of how to qualify:
If the borrower plans to use personal bank accounts:
Luxury Mortgage requires the most recent 12 or 24 months of statements for personal bank accounts and the most recent three months of statements for business bank accounts. Deposits must be sourced, meaning you must provide a source of how, when and where the deposit occurred. Examples of deposit sources may include cash receipts, cancelled checks, customer invoices, payment stubs for interest, and so on. Ask your loan officer to provide you with a list of acceptable sources when you inquire about the Bank Statement Qualifier Loan. Borrowers must also utilize 100% of the deposits into their personal accounts as income.
If the borrower plans to use business bank accounts only:
Luxury Mortgage requires the most recent 12 or 24 months of business account statements. In order to find the dollar amount that may be used to qualify, borrowers can multiply all eligible deposits by 50% and again by the borrower’s ownership percentage in the business. Eligible deposits are those that can be sourced as business income.
Benefits of Bank Statement Loans
With the Bank Statement Qualifier mortgage from Luxury Mortgage Corp®, eligible borrowers can borrow up to 80% of the home value, take advantage of the low minimum credit score requirement (down to 580), borrow up to $6,000,000 and use deposits from personal and business accounts–all while enjoying competitive rates and pricing.
Other Options Worth Considering…Which is Right for You?
The Bank Statement Qualifier mortgage can be an ideal solution for many borrowers, but it may not be the best option for everyone. Here are a few other loan products that may be a good fit for 1099 earners, investors, business owners and the like:
Asset Qualifier Home Loan— Use assets to qualify instead of W-2s or tax returns. This is a good option for borrowers with substantial assets but who lack consistent, documentable income. Investors looking for a home loan on a primary residence may find this program ideal.
Investor Cash Flow Loan – Use the anticipated or established rental income on an investment property to qualify for the new loan. This loan is well-suited for real estate investors.
FHA Loan – These government-backed loans are popular among first time buyers, repeat buyers, and those who lack enough cash funds for a traditional 20% down payment. The low money down feature and lenient credit score requirements mean the interest rates may be higher than conventional loans. This may be a good option for self-employed borrowers with consistent employment in the same line of work for 2+ years. However, 1099 earners, business owners, investors, etc. who do not have consistent streams of income or employment may have their applications rejected.
Questions? Connect with us today to learn more!
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