This ARTICLE On Non-QM And Bank Statement Mortgage Guidelines And Requirements Was PUBLISHED On July 31st, 2019
Gustan Cho Associates Mortgage Group offer a wide variety of mortgage products.
- Over the past few years, we have seen the comeback in NON-QM and Bank Statement mortgage lending
- QM stands for qualified mortgage
- Please read our blog detailing what a QM MORTGAGE is for more information
- NON-QM means non-qualified mortgage, where Fannie Mae, Freddie Mac, VA, and FHA guidelines are not required
- Of course, each NON-QM and Bank Statement Mortgage loan product has different qualifications
- These mortgage products open up opportunities for thousands of Americans to buy a home or refinance their home
In this blog, we will detail the ins and outs of our Non-QM And Bank Statement Mortgage Guidelines And Requirements.
Non-QM And Bank Statement Mortgage Programs
A bank statement loan simply uses your business or personal bank statements to calculate income.
- Unlike a traditional mortgage, W-2s, paystubs, and tax returns are not required
- Only your business income shown on your bank statements will count as income for this mortgage product
- This is a great tool to use for self-employed borrowers
- Many times, self-employed borrowers utilize write-offs on their Federal tax returns filed with the Internal Revenue Service (IRS)
- While many lending institutions advertise that they offer Non-QM and bank statement mortgage loans, it is important to select a loan officer who is familiar with these loan products
- Gustan Cho Associates fund NON-QM and bank statement mortgage loans every month
We are experts in the bank statement loan guidelines and know how to get these loans to the finish line as fast as possible.
Types Of Non-QM And Bank Statement Mortgage Programs
We have numerous outlets for our Non-QM and bank statement mortgage loans.
- Each with slightly different qualifications
- Credit scores may go down all the way to 580 and still utilize a bank statement loan
- Just like any other mortgage, the credit score does have an impact on the interest rate
- Higher the credit score, lower the interest rate
- All of our bank statement mortgage options require a minimum of 10% down payment
- Since we complete so many bank statement loans, we have an underwriting team who will calculate your bank statement income upfront before you are issued a pre-approval
- This way, the amount of income underwriting will use for the loan will not change during the mortgage process
This will allow you to confidently shop for a home within your price range and budget.
Credit Scores Versus Down Payment Requirement
The higher the borrower’s credit scores, the less the down payment is required. Below is the credit score versus the down payment requirement:
- Credit scores 580-599 will require at least 20% down payment
- Credit scores 600- 659 require at least 15% down payment
- Credit scores 660 and above only require a 10% down payment
(SUBJECT TO CHANGE)
Case Scenario Of Recent Borrower
Example when a bank statement loan is used.
- In this example, we will utilize a borrower name, Mark
- Mark is a self-employed borrower who runs a landscaping business
- When Mark files his IRS tax returns, he utilizes almost every right off he can
- So, in the eyes of the IRS, he does not make much income
- The debt-to-income ratios will not allow Mark to qualify for a conventional or FHA mortgage
- Mark is looking to purchase a home because he is tired of renting
- Mark shows plenty of business-related deposits on his bank statements over the past 12 months
- Mark uses a separate bank account for business and personal items
- Mark has a credit score of 643. In this example, Mark will need a 15% down payment
- This is not a problem
- Mark will sit down with his CPA and decide if paying a higher interest rate on the mortgage is saving him more money versus claiming more income to the IRS
- If Marc chooses, he can file his next two years of tax returns showing higher income
- While this may result in paying more income tax, he will soon be able to refinance into your standard conventional or FHA mortgage and have a lower interest rate
It is important to work closely with your tax professional to see where this breakeven points lands.
Terms Of Non-QM And Bank Statement Mortgage Loans
The majority of Non-QM and bank statement mortgage loans are structured on a 5/1 or 7/1 adjustable-rate mortgage (ARM).
- This gives you a full five or seven years to complete a refinance before the rate starts to adjust
- Many clients utilize this time frame to file stronger tax returns to refinance into a lower rate
- You may also increase the rate slightly to turn the bank statement loan into a 30-year fixed mortgage
- Depending on your business write-offs and advice from your tax professional, will determine which option is best for you
Other Types Of Alternative Financing Programs Offered At Gustan Cho Associates
There are many reasons clients use NON-QM mortgages besides bank statement loans.
- We offer a full slate of investment property mortgages, foreign national products, asset depletion mortgages, and debt consolidation NON-QM loans
- There is even a 5% down payment Jumbo Mortgage option
See below for a quick synopsis of NON-QM mortgage options:
- The investor cash flow mortgages require the rents received on an investment property to cover the NON-QM mortgage payment
- You can also put down as little as 20% to receive to enter my needs mortgages
Foreign national programs are set up for investors who do not live in the United States but would like to invest in real estate here. Even without a United States credit report, they are still eligible for mortgage financing.
Asset Depletion Mortgage Loan Programs
Asset depletion is something that is really picked up over the past few years.
- This allows a borrower to utilize liquid assets as income to qualify for a mortgage
- Depending on the rate in which these assets will deplete, will determine how much income can be used from the assets
FREDDIE MAC has a similar program.
Debt Consolidation Non-QM Mortgages
NON-QM Has amazing debt consolidation loans available.
- Depending on your credit score, you may go as high as 90% loan-to-value
- Fall conventional Cash Out mortgages are capped at 80% LTV
- FHA mortgages are capped at 85% LTV
- NON-QM can go all the way to 90% LTV
- This is only true if you are consolidating debt
A client may not receive any cash in hand with a debt consolidation NON-QM loan.
95% LTV Non-QM Jumbo Mortgages
95% JUMBO MORTGAGE:
- You may now use a NON-QM Jumbo loan with just 5% down payment
- This is an amazing option for clients with a 720 credit score higher
Please see our 95% JUMBO MORTGAGE BLOG for more information.
For more information on our bank statement mortgages or our other NON-QM and Bank Statement Mortgage loan options, please reach out to Mike Gracz on 630-659-7644 or text us for faster response. Or email us at firstname.lastname@example.org. Mike is the expert on our NON-QM products. Either Mike or one of the highly-skilled loan officers at Gustan Cho Associates will assist you with your NON-QM and Bank Statement Mortgage pre-approval. We are available seven days a week to assist you with your mortgage needs. NON-QM and Bank Statement Mortgage options Open the pathway to homeownership for thousands of Americans who do not fit in the highly regulated mortgage guideline round. Please reach out today for more information.