For self-employed individuals seeking home financing, traditional income documentation like tax returns and W-2s can often pose challenges. A Bank Statement Loan is a specialized mortgage product designed to address these challenges, offering flexible qualification criteria based on bank statement deposits. Here’s a detailed guide to help you understand how these loans work, their benefits, qualifications, and the specific Bank Statement Loan products available through Jhenesis Mortgage
What Is a Bank Statement Loan?
A Bank Statement Loan is a mortgage option designed to serve self-employed borrowers or individuals with non-traditional income. Instead of relying on tax transcripts or other conventional income verification documents, qualified borrowers can use their personal or business bank statements to demonstrate income.
Key Features:
- Loan Types: 30-Year Fixed
- Eligible Transactions: Purchase, rate & term refinance, and cash-out refinance
- Property Types: 1-4 units, primary residences, second homes, and investment properties
- Bank Statements Required: Minimum of 12 consecutive months of statements
- Borrower Requirements: At least one borrower must be self-employed, and their business ownership must be at least 25%. Non-self-employed co-borrowers may also qualify.
How Do Bank Statement Loans Work?
- Income Calculation:
Borrowers submit 12 or 24 months of personal or business bank statements. Lenders review deposits to calculate qualifying income. For business accounts, an expense factor (typically 50-70%) is applied to estimate actual income. - No Tax Returns Needed:
Borrowers who submit tax returns or other conventional income documents are not eligible for Bank Statement Documentation loans. - Flexible Use Cases:
These loans can be used to purchase a home, refinance an existing loan, or access equity through cash-out refinancing. - Higher Loan Amounts and Flexible Terms:
Depending on the product, loan amounts can reach up to $3.5 million, with maximum Loan-to-Value (LTV) ratios as high as 90%.
General Qualifications for Bank Statement Loans
To qualify for a Bank Statement Loan, you must meet the following criteria:
- Self-Employment: At least one borrower must be self-employed for at least two years and own a minimum of 25% of their business.
- Bank Statements: Provide 12-24 consecutive months of bank statements from the same account. Personal bank statements cannot include comingled business income.
- Credit Score: Minimum scores range from 620 to 660, depending on the product.
- DTI Ratio: Maximum Debt-to-Income (DTI) ratios range from 50% to 55%.
- Reserves: Reserve requirements vary based on the loan amount, property type, and LTV ratio.
- Property Restrictions: Loans are available for properties up to 20 acres. Ineligible property types include manufactured homes, non-warrantable condos, raw land, and mixed-use properties.
Bank Statement Loans for Self-Employed Products Offered by Jhenesis Mortgage
Jhenesis Mortgage offers several Bank Statement Loan products, each tailored to specific borrower needs. Here’s a comparison of their key features:
Bank Statement 30-Year Fixed – Yellow
- Max Loan Amount: $3,000,000
- Max LTV: 90%
- Min FICO: 620
- Max DTI: 50%
- Reserves: Varies by loan amount and property type
- Cash-Out Proceeds: Up to $1,000,000
- Restrictions: Not available in West Virginia or for Texas 50(a)(6).
Bank Statement 30-Year Fixed – Orange
- Max Loan Amount: $3,500,000
- Max LTV: 90%
- Min FICO: 660
- Max DTI: 55%
- Reserves: Varies by loan amount and property type
- Cash-Out Proceeds: Up to $750,000 for loans over 60% LTV, no cap for ≤ 60% LTV.
- Restrictions: Not available in West Virginia or for Texas 50(a)(6).
Bank Statement 30-Year Fixed – Pink
- Max Loan Amount: $3,000,000
- Max LTV: 85%
- Min FICO: 660
- Max DTI: 50%
- Reserves: Varies by loan amount and property type
- Cash-Out Proceeds: Up to $500,000 for loans over 60% LTV, no cap for ≤ 60% LTV.
- Restrictions: Not available in West Virginia or for Texas 50(a)(6).
Bank Statement 30-Year Fixed – Blue
- Max Loan Amount: $2,000,000
- Max LTV: 80%
- Min FICO: 660
- Max DTI: 50%
- Reserves: Varies by loan amount and property type
- Cash-Out Proceeds: Up to $350,000 for single-unit properties, $150,000 for 2-4 units.
- Restrictions: Not available in West Virginia or for Texas 50(a)(6).
Expenses Associated with Bank Statement Loans for Self-Employed
- Down Payment:
Minimum down payments range from 10% to 20%, depending on the product, credit score, and loan amount. - Closing Costs:
Expect to pay 2% to 5% of the loan amount in closing costs. - Interest Rates:
Rates are typically higher than conventional loans, reflecting the increased risk to lenders. - Reserves:
Reserve requirements may range from 3-12 months of mortgage payments, depending on loan specifics.
Is a Bank Statement Loan Right for You?
Bank Statement Loans offer unparalleled flexibility for self-employed borrowers or individuals with complex income streams. Whether you’re looking to purchase a home, refinance, or access equity, these loans provide a path to homeownership without the hurdles of traditional income verification.
For personalized guidance and to determine the best Bank Statement Loan product for your needs, contact your mortgage professional or reach out to Jhenesis Mortgage today!
FAQ: Everything You Need to Know About Bank Statement Loans
The perfect mortgage solution for self-employed homebuyers!
Q1: What is a Bank Statement Loan?
A Bank Statement Loan is a type of mortgage designed for self-employed borrowers. Instead of traditional income verification like tax returns, you can qualify by providing 12-24 months of personal or business bank statements.
Q2: Who is eligible for a Bank Statement Loans for Self-Employed
Self-employed individuals with at least 25% business ownership are eligible. Non-self-employed co-borrowers can also qualify if one borrower meets the requirements.
Q3: What’s the minimum down payment?
Down payments typically range from 10% to 20%, depending on the loan product, credit score, and income.
Q4: What are the associated costs?
Expect closing costs (2%-5% of the loan amount), slightly higher interest rates, and possible reserve requirements of 3-12 months of mortgage payments.
Q5: What property types are eligible?
You can finance primary residences, second homes, and investment properties (1-4 units). However, manufactured homes, co-ops, and raw land are ineligible.
Q6: How much can I borrow with a Bank Statement Loans for Self-Employed?
Loan amounts go up to $3.5 million, depending on the specific product and qualifications.
Q7: What are the benefits of Bank Statement Loans?
- No tax returns or W-2s required
- Flexible income calculation
- Ideal for entrepreneurs, freelancers, and business owners
Learn more about how Bank Statement Loans can make your homeownership dreams a reality. Contact Jhenesis Mortgage at 407-630-9766 or visit https://www.jhenesismortgage.com today!