Qualify even if the business is showing a loss.Allows self-employed individuals and 1099 contractors to qualify.Advantages And Disadvantages of Bank Statement Loans 1) Pros of Bank Statement Loans This is an incredible and expanding area of mortgages that levels the playing field for self-employed borrowers, providing the opportunity to qualify without tax returns.
Self-employed borrowers are able to document their ability to repay based on business deposits into their personal or business bank accounts, i.e., their true cash flow. With bank statement loans, lenders still want to ensure borrowers can repay their mortgages, they just use bank statements to verify income as to opposed to tax returns. This puts self-employed borrowers at a disadvantage. But for self-employed borrowers, traditional mortgage lenders look at net income, the adjusted gross income showing on tax returns. For salaried and hourly borrowers, the lenders look at gross income for qualifying purposes. Traditional mortgage lenders require tax returns, W-2s, and paycheck stubs in order to determine monthly income. Bank statement loans are for self-employed and other non-salaried persons who make sufficient income to support a mortgage payment but whose tax returns don’t accurately reflect this.
Bank statement loans have become the best Arizona and California home loan option for self-employed borrowers to purchase or refinance a home loan.
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