Bank Statement Loans

What is a Bank Statement Loan?

Bank statement loans have taken over the traditional stated income loans as an alternative for borrowers who are unable to verify their income in the traditional way by providing the previous two years tax returns, W2s and pay stubs. These are non-QM loans, nontraditional loans or expanded criteria loans that allow other forms of documentation to prove the ability to repay. Just as it sounds, a bank statement loan allows the borrower to verify his or her income with bank statements.

Advantages of a Bank Statement Loan

In summary, these are the advantages of a bank statement loan:

• The lender does not need to look at your tax returns or tax transcripts.
• Your income statements are made up of regular monthly income deposits.
• The lender can look at 12 or 24-month bank statements.
• If you own a business, you can show 24 months of business statements and a P&L statement for the same period. A P&L statement (profit and loss statement) is prepared by a Certified Public Accountant. Not all business owners will be required to present one.
• You can get a bank statement home loan for as little as 10 percent down.
• You can do a cash-out refinance loan of up to 85 percent of the value of your property.
• You can borrow up to $5 million.
• Typically, bank statement lenders will accept a debt to income ratio of a maximum 55 percent.
• You have the option of a fixed-rate or adjustable mortgage.
• You may have the option for an interest-only mortgage.