Bank statement loans help self-employed borrowers, real estate investors, retirees, and other types of “alternative-income” borrowers easily prove their income without having to provide tax documents.
If you’re a self-employed homebuyer or homeowner in Michigan, you may be able to get a loan by simply providing 12-24 months of bank statements to prove your income.
Bank statement loans are growing in popularity in Michigan. Let’s take a look at how they work so you can determine whether this option is right for you.Start your Michigan bank statement loan.
What’s in this article?
Most loans require borrowers to provide W-2s and tax returns to prove their adjusted gross income amount.
But self-employed borrowers don’t have W-2s, and their tax returns often show an incorrect income amount due to the write-offs they make to sustain their business.
Instead of tax documents, bank statement loans rely on 12-24 months of bank statement deposits to prove income.
Lenders use 30-100% of the average deposits, known as the “expense ratio,” which can offer significantly different income results than your tax returns and allow you to potentially qualify for more.
Take a look at the difference between using bank deposits vs. adjusted gross income on tax returns in the table below.
|Bank Deposits||Adj. Income on Tax Returns|
|Est. max home price||$400,000||$285,000|
Estimated max purchase price based on 43% DTI, 20% down, $250 monthly debts, 1% property tax, $600 annual insurance, 8% rate for bank statement loan and 6.5% rate for conventional. Example purposes only.
With a bank statement loan in Michigan, you could potentially qualify for a home that’s $115,000 more than you could with tax returns alone. This widens your opportunities to buy, invest, and refinance across the state.Get started on your Michigan bank statement loan.
Bank statement loan requirements in Michigan vary by lender, but you can generally expect the following:
- Must be self-employed for at least two years
- Must provide 12-24 months of personal or business bank statements
- May combine W-2 or 1099 income with bank statement income
- No tax returns or transcripts required
- Down payment amounts starting at 10%
- Credit score of at least 600-660, but higher is better
- No mortgage insurance required
- Available for purchase loans, refinance loans, or cash-out
- Available for a primary residence, second mortgage, or investment properties
- 1-4 unit homes and warrantable or non-warrantable condos
- DTI of up to 50% allowed
- Maximum loan amounts up to $3-5 million
- At least three months of cash reserves
Who are these loans good for?
The top industries in Michigan’s robust economy include agriculture, manufacturing, technology, and tourism.
There’s no shortage of self-employed individuals, business owners, and entrepreneurs taking advantage of the range of opportunities inside and outside of these industries.
The following table includes the types of individuals who are an excellent match for a bank statement loan in Michigan.
|Realtors||Business owners||Real estate investors|
|Consultants||Gig workers||Independent contractors|
|Growers||Freelancers||Contract tech workers|
|Event planners||Life coaches||Independent travel agents|
Basically, almost anyone without a “regular job” and a W-2 could benefit from the flexibility of a bank statement loan.
The bank statement loan process in Michigan and how long it takes
Borrowers can often get approved for a bank statement loan faster than a traditional loan because the income and employment verification process is more straightforward.
Rather than using tax returns, pay stubs, and bank statements, the lender often can verify your income with your bank statements alone in as little as a day.
Your bank statements reveal your actual income as a self-employed individual, so using these statements allows lenders to see exactly where your money is coming and going each month.
Take a look at the following steps to getting a bank statement loan in Michigan:
- Apply for a bank statement loan with a lender
- Provide 12 to 24 months of personal or business bank statements
- Lender will determine your income in two to three days
- Lender will offer your maximum loan amount based on income
- Receive pre-approval letter and begin searching for your home
- Make an offer on your home
- Once the offer is accepted, lender will provide steps for final approval
- Sign your final paperwork
- Close on your home, get your keys, and walk in the door
It can take as little as 3 weeks to close on a bank statement loan in Michigan, compared to 45 to 60 days for a traditional loan.
Bank statement loans are available all around the state of Michigan but are particularly popular in the following areas.
|Detroit||Grand Rapids||Ann Arbor|
Whether you are looking to purchase a home in one of these cities, the surrounding areas, or an entirely different part of the state — including the Upper Peninsula — consider using a flexible, fast bank statement loan.
Bank statement loan interest rates in Michigan are around 2% higher than Fannie Mae and Freddie Mac conventional rates because they have fewer documentation requirements.
The strict documentation required for loans backed by Fannie Mae and Freddie Mac is meant to be added “protection” for lenders, and they can offer lower rates in return.
But conventional loans can be difficult to qualify for, for many types of borrowers.
Bank statement loans offer a flexible, alternative solution for Michigan borrowers, and in many cases, borrowers may be able to qualify for a higher loan amount than their conventional counterparts.
Learn more about bank statement loans.
Not all lenders offer bank statement loans in Michigan. Some institutions that offer this loan type in the state include:
- Griffin Funding
- Advantage Lending Corp
- CrossCountry Mortgage
- Angel Oak Mortgage Solutions
While it may be simple to connect online with a lender that offers bank statement loans in your area, it can be more difficult to find one that matches your unique needs.
We can match you to the perfect lender that meets these needs based on your answers to a few scenario questions.Submit your scenario.
If a bank statement loan doesn’t quite fit what you need, you do have other no-tax-return mortgage options.
Take a look at the following alternative lending solutions that may work better for your scenario.
DSCR loans: Debt Service Coverage Ratio loans are used to finance rental properties. The beauty of this loan type is that it leverages your future potential rental income to determine your eligibility. If your potential monthly rental income is higher than your monthly payment amount, you may get approved for a loan.Submit your DSCR loan scenario.
Asset Depletion: Borrowers who have significant assets may qualify for an asset depletion mortgage. Instead of looking at your income, your lender will divide your qualifying asset balance by a certain number of months, and the resulting figure will be your income. For example, $1 million in savings divided by 120 months is equal to an income of $8,333 per month.
Stated Income: Stated income loans, or no ratio loans, don’t involve any income at all. The lender instead will focus on a borrower’s credit score and overall financial profile.
1099 Loans: 1099 loans use a borrower’s 1099 forms to verify income instead of tax returns. Lenders also may require the borrower’s profit and loss (P&L) statements or bank statements to verify income.Get approved using only 1099s.
P&L loans: P&L loans use your profit and loss statements from your CPA to verify your income instead of tax returns.
Hard money loans: Hard money loans are a flexible, short-term financing option meant to provide funds fast until you can secure a permanent source of financing. For example, if you purchase a property to fix and flip, then refinance into long-term financing.
Pros and cons
Every loan has its pros and cons depending on the borrower’s personal and financial needs. These bank statement loan pros and cons can help you determine whether this option is right for you.
- May be able to qualify for a much larger loan
- Can qualify based on 12-24 months of bank statements (or even three months in some instances)
- More flexible loan requirements set by lender
- Can finance any type of home purchase
- No mortgage insurance requirement
- Higher interest rates
- Higher down payment amount
- Not all lenders offer them
- Not regulated like government-backed loans
- Lender can see non-sufficient funds on bank statements
Bank statement loans are simple to qualify for, but the hardest part may be finding a lender that matches your loan needs. Fortunately, there are many lenders in Michigan that offer bank statement loans.
Bank statement loans require one to two years of bank statements to prove your income. You also must have a good credit score and at least three months of cash reserves.
Credit score requirements vary by lender, but you generally should have a credit score of at least 600-660 to qualify for a bank statement loan in Michigan. As with any loan option, the higher your credit score, the better.
Bank statement lenders usually require at least 10% down for your loan.
See if you qualify
Alternative borrowers in Michigan are discovering that their hard work has its rewards.
Many self-employed, retired, and other types of borrowers are getting approved quickly and easily for a bank statement loan with as few as 12 months of statements — and qualifying for bigger loan amounts than they ever dreamed possible.Check your bank statement loan eligibility.