12 Month Bank Statement Mortgage For Self-Employed Borrowers
This article covers 12 Month Bank Statement Mortgage For Self-Employed Borrowers Until recently, most self-employed home buyers had a difficult time qualifying for a mortgage. Many self-employed home buyers often have the means to afford a higher-end home. Self-employed wage-earners have the luxury to write off many business expenses under the IRS Tax Code. Writing off business expenses from their gross income benefits self-employed wage-earners in paying less in income taxes.
Mortgage Options With 12-Month Bank Statement Loans For Self-Employed Borrowers
Many self-employed people with shrewd accountants often pay little to no taxes due to taking advantage of the tax codes. Many have negative income. Unfortunately, a lot of write-offs mean self-employed wage-earners have a difficult time qualifying for a mortgage. Traditional lenders will use adjusted gross income when calculating qualified income. Great news for self-employed home buyers with non-QM loans. Gustan Cho Associates has non-QM mortgages for self-employed borrowers with no income tax returns required. In this article, we will discuss and cover non-QM bank statement mortgages for self-employed borrowers.
How Does The Bank Statement Mortgage For Self-Employed Borrowers Work?
https://www.youtube.com/watch?v=wMrKi9uF2Fo The Bank Statement Mortgage For Self-Employed Borrowers offered at Gustan Cho Associates Mortgage Group works as follows:
- Must be self-employed.
- Qualified Income is derived by averaging the past 12 months of bank statement deposits.
- It can be either personal and/or business bank statements.
- Needs to be 12 months of bank statements from one bank.
- Only deposits count.
- Withdrawals do not matter.
- The borrower can deposit $10,000 per month and withdraw $9,999 the next day.
- Only the $10,000 deposit will be used for income.
- No bank overdrafts in the past 12 months.
- The average of the 12 months deposits is the monthly qualified income.
Income tax returns are not required. Income from bank statement mortgage loan programs will only go by the past 12 months of bank statement deposits.
Other Lending Guidelines To Qualify For Bank Statement Mortgage For Self-Employed Borrowers
To qualify for the Bank Statement Mortgage and/or Non-QM Loans, borrowers should have 3 established credit tradelines that have been seasoned for the past 24 months. Verification of rent and/or past housing payment history is required. Debt to income ratios cannot exceed 50% DTI. A 10% to 30% down payment is required. The amount of the down payment is dependent on the borrower’s credit scores, type of property, and credit history.
Non-QM Mortgage Loan Limits And Minimum Credit Score Requirements
The maximum loan limit is $3 million. Loan size over $3 million is underwritten on a case by case scenario basis and may require an additional down payment and reserves. There is no private mortgage insurance required. Minimum credit scores of 500 FICO are allowed. The lower the credit scores, the higher the down payment requirement. Late payments in the past 12 months, including mortgage late payments, are allowed. There is no waiting period requirement after bankruptcy, foreclosure, deed in lieu of foreclosure, short-sale. Non-QM Loans and Bank Statement Mortgage on primary owner-occupant home loans have no pre-payment penalty.
Benefits Of Non-QM Bank Statement Mortgage
There are many benefits of Non-QM and 12 Month Bank Statement Mortgage For Self-Employed Borrowers. Non-QM Loans are not for borrowers with just bad credit. Many borrowers who qualify for government and conforming loans often benefit from Non-QM Mortgages. Here are the main benefits of using Non-QM And 12 Month Bank Statement Mortgage For Self-Employed Borrowers:
- Borrowers who exceed government and conforming limits
- Borrowers with late payments in the past 12 months, including mortgage late payments
- Borrowers who do not meet the mandatory waiting period after bankruptcy, foreclosure, deed in lieu of foreclosure, short-sale
- Homebuyers needing a jumbo loan but have lower credit scores down to 500 FICO
- Self-employed borrowers who have little to no income or negative income on their tax returns can qualify with our Non-QM 12 Month Bank Statement Mortgage
For more information about the contents of this article or other mortgage-related topics, please contact us at Gustan Cho Associates at 262-716-8151 or text us for a faster response. Or email us at [email protected] The Team at Gustan Cho Associates is available 7 days a week, evenings, weekends, and holidays.
Mortgage Loan Requirements 12-Month Bank Statement Mortgage For Self-Employed Borrowers
The U.S. economy is booming. On Friday, November 6th, 2020, the Labor Department announced job growth numbers for November 2020. The numbers came in at $318,500 which far surpassed economists’ expectations. This breaking news sent the Dow Jones Industrial Averages skyrocketing. All other major stock market indexes set a historic record with the job growth numbers report. Unemployment numbers at 3.5% set a record. Unemployment hit a 50-year low.
Mortgage Rates Lowest In Decades
Mortgage rates have been the lowest since the 2008 Great Recession. Many mortgage companies are launching creative mortgage loan programs such as the 12-month bank statement mortgage for self-employed borrowers. 12-Month Bank Statement Mortgage and subprime loans have been non-existent after the 2008 Credit Market Collapse. What all this means is the U.S. housing market is on fire with no signs of any market correction in the near future. Many self-employed homebuyers have been shunned from the housing market until the 12-Month Bank Statement Mortgage was launched a few years ago. In this ARTICLE, we will cover and discuss 12-Month Bank Statement Mortgage For Self-Employed Borrowers.
How Does The 12-Month Bank Statement Mortgage Program Work
Self-employed borrowers have the benefit of deducting countless expenses associated with doing business. Until the introduction of our bank statement mortgage program, self-employed homebuyers had a rather difficult time qualifying for a home mortgage. Unreimbursed expenses affect the gross income numbers when self-employed wage earners file their income taxes. The gross income less the expense deductions yields the adjusted gross income. Lenders will go off the adjusted gross income on tax returns when processing and underwriting qualified income.
How Self-Employed People Have A Hard Time Qualifying For A Mortgage
Due to the extensive deductions, self-employed borrowers often got to pay substantially less in taxes. However, self-employed wage earners with substantial unreimbursed business expenses had a difficult time qualifying for a home mortgage. However, with the 12-Month Bank Statement Mortgage loan program for self-employed borrowers, income tax returns are not required. Borrowers need to provide bank statements for the past 12 months. The average monthly deposits are averaged for the past 12 months and that figure is used as the borrower’s monthly income. Withdrawals do not matter.
How Is Income Calculated On 12-Month Bank Statement Mortgage For Self-Employed Borrowers?
Self-employed borrowers can now qualify for mortgages on purchase and refinance transactions without income tax returns. Since lenders go off adjusted gross income after tax deductions, qualifying for a mortgage was difficult until now. Mortgage underwriters do not need income tax returns when calculating 12-month bank statement mortgage loans.
Qualified Income Are The Average Of 12 Months of Deposits
Underwriters go off bank statement deposit averages over the past 12-months. The way underwriters calculate qualified income is by adding the total bank statement deposits for the past 12 months and then dividing it by 12. The yielding figure is the monthly qualified income used for debt to income calculations. Withdrawals do not matter. Borrowers can make a $10,000 deposit every month and withdraw $9,999 and the income used is $10,000.
Calculating Eligible Deposits By Mortgage Underwriters
Underwriters will carefully analyze each month of bank statements of the borrower for the past 12 months. They will take the end of the month date of statements. During the month, they will calculate the total deposits including irregular deposits. Deposits of non-business deposits such as alimony and/or child support deposits will also be taken into consideration.
How Morgage Underwriters Analyze Bank Statements To Determine Qualified Income
Mortgage underwriters will exclude credit returns, account transfers, and credit card advances. All the above factors will be taken into considerations when calculating qualified income and debt-to-income ratios. 12-month bank statement mortgage guidelines differ from lender to lender. Either personal and/or bank statements can be used for bank statement mortgage loans. It can only be 12-month bank statements from one banking institution. It cannot be multiple bank statements from different banks.
Asset Depletion Mortgage Programs With No Income Required
Gustan Cho Associates offers asset depletion mortgage loan programs for borrowers who have no income but have substantial assets. A percentage of the assets is used as qualified income. The qualified income is derived by totaling all assets and taking a percentage of the assets through our income tool calculator.
The following are considered qualified assets:
- Stocks, bonds, and other securities
- Mutual funds.
- Vested amount of retirement account
- Bank accounts
- Other assets
Each of our various asset depletion investors has different ways of calculating qualified assets. Please read our asset-depletion article on Gustan Cho Associates. Freddie Mac also has an asset depletion mortgage program.
12-Month Bank Statement Mortgage Guidelines On Credit Scores
The minimum credit score requirements to qualify for Bank Statement Mortgage Programs are 500 FICO. However, the lower the borrowers’ credit scores, the higher the down payment requirements. To qualify for a 12-month bank statement mortgage, the minimum credit score requirements are 620 FICO with a 20% down payment. For borrowers who have credit scores down 500 FICO, lenders will require 24 months of bank statements with a 25% down payment. Borrowers with over 720 credit scores can qualify for a 10% down payment home purchase loan. There are no maximum loan limit caps on bank statement loan programs.
How Long Does The Borrower Need To Have Been In Business
Self-employed borrowers need to have been in business for at least two years in the same business to qualify for bank statement loan programs. The business needs to have been verified to have been in business for 24 months. Proof can be provided by providing the lender with a business license and/or other documents. Bank statement mortgage programs are available for owner-occupant homes, second/vacation homes, and investment properties. For more information about our bank statement mortgage programs at Gustan Cho Associates, please contact us at 262-716-8151 or text us for a faster response. Or email us at [email protected] The Team at Gustan Cho Associates is available 7 days a week, evenings, weekends, and holidays.