What exactly are “bank statement loans” and is it something that can benefit you and your family? Well, you’re about to find out. There is no such thing as a one-size-fits-all mortgage and we can’t all be expected to fit into this nice little box of qualifications that the government deems as “quality” so lenders have come up with alternative ways of documenting loans called “Non-QM” loans.
One of those alternatives is the Bank Statement loan. Not all of us receive W2 income or regular paychecks. Many of us live off of tips, side hustles, commissions or we’re self-employed using every legal strategy to reduce our taxable income. These types of income or reports of income can make it difficult for an underwriter to establish income that can be used in the qualification of a typical mortgage.
To help people who have these sorts of incomes, some lenders will allow the use of bank statements as an alternative method of verifying income. Lenders simply add up the deposits shown on each statement and divide it by a number of months as set by each lender’s guideline to establish an average. As you may expect, things like one-time deposits or transfers are not counted in those calculations.
Depending on the lender, the bank statements can be business or personal and the number of months required can range from 3 to 24. The more months that are provided, the more accurate the anticipated cash flow and therefore the better the interest rate that is offered.
So, if you’re having difficulty getting a loan approved, you may want to look into one of the available bank statement programs being offered by lenders.
