What Is The Bank Statement Mortgage Program?
Our specialized Bank Statement Mortgage loan is a home loan program that allows you to document your income using an alternative method to traditional documentation. Most loan applicants choose the 30-year fixed-rate option; however, other fixed-rate options and adjustable rates are available.
Bank Statement Mortgage Requirements
Here are the basic requirements and who should consider the Bank Statement Mortgage program. The program is flexible, efficient, and the rates are competitive. If your documentation is in order, you can generally close in 25-30 days.
Who Should Consider A Bank Statement Mortgage
The Bank Statement Mortgage is best for small business owners, freelancers, independent contractors, seasonal workers, or anyone with difficulty sourcing income.
Bank Statement Mortgage Rates
Mortgage rates under the program are competitive (higher than regular conventional but lower than private money), and usually, applicants are surprised by how low they are. Like other programs, rates are impacted by credit scores and equity.
Bank Statement Mortgages At CMF
Low Mortgage Rates: You might be very surprised how low our Bank Statement Mortgage rates are.
Let’s Close It Fast: Once we have your documentation, we can close it within 30 days.
Experience Matters: Over two decades of experience at CMF. You won’t find that at a call center.
Partner With US
We’re here to ensure you get the right mortgage in the least amount of time. Experience, knowledge and trust make us the ideal partner on your next mortgage transaction.
Bank Statement Mortgage Benefits
The most significant benefit of the Bank Statement Mortgage program is that it offers an alternative to those who don’t qualify for a traditional mortgage. Here are some additional benefits you should consider.
No Tax Returns Needed
The Bank Statement Mortgage program does not require tax returns, nor any other official income document. Just 12-24 months of bank statements.
Property Eligibility
Property eligibility includes Single-Family Residences, Condominiums, Townhomes, and properties with 1- 4 units. Commercial properties are not accepted.
Derogatory Credit Accepted
Derogatory credit history is accepted. Bankruptcy, foreclosure, missed payments, and more. After your credit report is reviewed, the loan officer will discuss possible options.
Personal or Business Statements
A great feature about our Bank Statement Mortgage program is that it allows for either 12-24 months of personal OR business bank statements. A nice benefit for our clients.
12 and 24-Month Bank Statement Guidelines
You may find lenders offering 12 and 24-month bank statement loan options. While they have the same premise – you qualify based on the average income reported on your bank statements, here’s the difference.
12-Month Bank Statement Mortgage
12-month bank statement loans take a 12-month average of your income. This is riskier for banks, so they often have higher interest rates or more rigid terms. Using 12 months of income doesn’t give banks a good idea of your business’s ability to succeed. It only provides one year of monthly changes, which isn’t enough time to decide if a business succeeds.
While 12-month bank statement loans are doable, they will usually cost you more in the long run.
24-Month Bank Statement Mortgage
24-month bank statement loans are less risky for lenders. They give lenders a 2-year history of your income and average your income over 24 months. This gives them a better chance to understand the viability of your business.
24-month bank statement loans have lower interest rates and better terms than 12-month loans.
The Difference Between Personal and Business Bank Statements
Here’s what you should know about providing personal and business bank statements;
If you provide personal bank statements, lenders can use 100% of the income reported (provided it’s clear the deposit came from the business). They’ll still take a 24-month (or 12-month) average, but they’ll use 100% of the income reported because it’s your personal income, not the business income.
However, if you only provide business bank statements, lenders can only use 50% of the income reported (that 50% number can be adjusted higher or lower). Let’s say you are providing 24 months of business bank statements. Lenders will divide the total deposited by two and then divide it by twenty-four to get the 24-month deposit average.
It’s always nice to have business bank statements because they show the actual receipt of income, but it doesn’t mean that 100% of the income belongs to you. That’s why lenders prefer personal and business bank statements, so your income is clear and understandable.
Explore Some Of Our Other Mortgage Programs
Conventional
A conventional mortgage is the most common mortgage program. Fannie Mae and Freddie Mac set the base guidelines.
FHA
FHA is a powerful program for those with less-than-perfect credit and a low down payment (or little equity).
Bank Statement Mortgage FAQs
How Hard Is It To Get A Bank Statement Mortgage?
Bank statement mortgages are primarily for the self-employed, freelancers, or independent contractors and take a little more effort to get qualified. You must meet the basic bank statement mortgage requirements, have decent credit, and have an acceptable debt-to-income ratio.
How Long Does It Take To Get Approved?
Unlike conventional or government-backed loans, bank statement loans are manually underwritten. This means they may take a little longer to underwrite because an underwriter must go through the loan, versus the automated system that traditional loans use. The typical time frame from when all your documentation is in to closing is thirty to forty days.
Do You Need The Bank To Verify Statements?
Sometimes, underwriters require you to prove that your bank issued the bank statements you turned in. If this happens, the underwriter will request that a bank complete a Verification of Deposit or stamp the bank statements to prove they are legitimate.
Is There a Pre-Payment Penalty?
Some bank statement mortgages have a one or two-year pre-payment penalty, while others might have a longer one. There are options with no pre-payment penalty, so be sure to ask your loan officer about this.
Does The FHA Have A Bank Statement Program?
No, FHA mortgages don’t have a bank statement option. Bank statement loans are only a niche product offered by banks that fund and keep the loans on their books. This means it might be a little harder to find a bank statement loan than it would be an FHA or conventional loan.