As a business owner getting qualified to purchase a home can be challenging when you do not have a salaried income. However, there are options for self-employed borrowers such as the bank statement loan program. This is a non-conventional loan which allows self-employed individuals to qualify for a loan easily.
What is a bank statement loan?
Bank statement loans are alternative for borrowers who are unable to verify income in the traditional format such as pay stubs, tax returns and W2. These are non-QM loans that allow self-employed individuals a method to prove their capability to repay the loan. The name “bank statement loans” speaks for itself as it allows borrowers to verify his or her income with bank statements. Bank Statement loans are a great option for the following types of borrowers:
Small Business Owners
A bank statement loan has provided an effective tool for borrowers who are struggling to show income on their tax returns when their true net income is much higher and could easily cover the monthly mortgage payment they need to make for their dream home. To apply for a bank statement loan with Lending Corner, the self-employed borrower will need to provide as little as 12 months of bank statements that show their regular deposits and allows our team to calculate a payment that the borrower can afford. Once this step has taken place, lending corner will reach out to your bank to request a verification of deposit. If you choose to your bank statement from your business we will also require to see the expenses your business incurs as part of the calculation to see what the borrower can qualify for however the borrower will not be penalized for expenses that have been written off on your tax returns.
These type of loans have provided a solution to borrowers’ challenge of using the net income claimed on their tax returns rather than the true net income that they make. This makes many borrowers ineligible for a loan. To apply for a bank statement loan, the self-employed borrower can provide the mortgage lender with as little as 12 months of bank statements which show regular deposits. This allows the lender to see how much you can afford to borrow. The lender would then verify your bank statements by calling your bank or by filling out a verification of deposit (VOD) request and mailing or faxing it to your bank. If you are using your business bank statements to qualify the lender will still need to see the expenses you incur as a result of owning a business but will not penalize you for expenses that you have written off on your tax returns.