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Bank Statement Loans are quickly gaining traction as the go-to mortgage solution for the self-employed, including real estate investors—but what are the bank statement loan requirements for 2023?
You might think that the required down payments are huge and credit scores high, but that’s not the case. Guidelines are often more loose than conventional, even though you’re qualifying with bank statements in place of tax returns.
They’re also more attractive than no-doc and hard money loans, which normally come with higher rates and shorter terms.
Many real estate investors don’t realize that bank statement loans can be applied to primary residences as well as non-owner-occupied residential investment properties.
Investment property bank statement loans are particularly beneficial when the plan is to buy and rent, or refinance and rent for an extended period.
If you’re considering a bank statement loan, look over the loan requirements for 2023.
Chapter 13 bankruptcies may need a shorter seasoning period if they were fulfilled and discharged. Generally, only one housing payment (either rent or a mortgage) can be 30 days overdue in the last 12 months. Those who live without rent are usually not considered for approval.
Lenders are flexible. Submit your scenario even if you don’t meet the above criteria.Stated income loans require no income verification from the borrower whatsoever. Bank statement loans require documentation—namely bank statements.
Personal bank account activity can be used to evaluate the borrower’s income if, for example, your business profits are deposited there. However, the evaluation becomes more complicated depending on whether anyone else uses the same account to deposit income—like a joint account between spouses. W2 income from a spouse can be used to qualify in some cases.
A little. Unless your partner is a co-applicant, the income on the account will have to be adjusted according to how much ownership is yours. A 50/50 split between partners would mean that only 50% of the deposits could count toward your application.
This is dependent on the lender. Most lenders will accept some gift funds, but expect them to require a minimum investment, and cash reserves after closing can almost never come from a gift.
Requirements vary from lender to lender, but the minimum range is 620-660. Keep in mind that the better your credit score, the more likely you are to get a lower interest rate for your bank statement loan.
When you’re self-employed or have your own business, you know that the more deductions you make for business expenses, the better it is for your bottom line.
However, deducting your business expenses often means cutting yourself out of a conventional mortgage loan—your tax return income doesn’t accurately reflect your true income.
But providing 3 to 24 months of bank statements could not only secure the mortgage you deserve but also save you thousands of dollars compared to other non-QM loans.
There are around 15 million Americans who are self-employed or own their own business. Add all the real estate investors nationwide, and you have a big portion of the overall economy.
Is it any wonder that conventional banks, credit unions, and lending institutions are beginning to wake up to the advantages of bank statement loans?
Submit your loan scenario to get started.Our advice is based on experience in the mortgage industry and we are dedicated to helping you achieve your goal of owning a home. We may receive compensation from partner banks when you view mortgage rates listed on our website.