Bank Statement Loans New York Financing Insights

Bank statement loans are an increasingly popular option for self-employed borrowers in New York who want to purchase a home.

This type of loan offers flexibility and can make it easier for those who don’t have tax returns to access the financing they need to buy a home.

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How do New York bank statement loans work?

A bank statement loan is a type of loan that allows borrowers to use their bank statement deposits to determine their income rather than their tax returns. 

This type of loan is particularly useful for self-employed individuals, small business owners, or those with irregular income who may have trouble meeting traditional loan requirements.

Perhaps you’re one of the 1.3 million freelancers in NYC (34% of the workforce) or otherwise run a small business in the state.

Lenders then use 30-100% of the average deposits (the “expense ratio”), depending on the business type. This can be a game changer as seen in this table.

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.

It’s important to note that bank statement loans often come with higher interest rates and stricter terms compared to traditional loans. 

However, if you can’t seem to meet traditional loan requirements, a bank statement loan in New York can open up opportunities for home ownership, investment, and refinancing.

Requirements

• Borrowers must be self-employed for at least two years.
• Down payments as low as 10% are accepted.
• There is no requirement for mortgage insurance.
• To qualify, a credit score of 620-660+ is necessary.
• The loan can be used to buy a primary residence, second home, or investment property, as well as for refinance or cash-out purposes.
• Only 12 or 24 months of bank statements need to be submitted for income verification.
• Borrowers can use either personal or business bank statements as proof of income; there is no need to provide tax returns or transcripts.
• The maximum allowed debt-to-income ratio is 50%.
• The loan can be used to finance 1-4 unit homes and warrantable/non-warrantable condos.
• Loan amounts can be as high as $3-5 million.
• As little as three months of reserves may be required to qualify for the loan.

Who are good candidates for bank statement loans in New York?

Bank statement loans in New York can be a great option for self-employed borrowers who may not have the traditional income documentation, such as tax returns or pay stubs, that traditional lenders require. The following are good candidates for this loan program:

In short, almost anyone without a “regular job” could benefit.

How long is the process?

This shortened bank statement loan process results in speedy approvals and funding that you won’t find with any other type of loan.

1. Complete your application with a preferred lender
2. Submit12-24 months of bank statements
3. In just 2-3 days, your lender will assess and determine your qualifying income
4. Your income will determine your maximum home price
5. Get pre-approved and start shopping for your new home
6. Secure a successful offer on a home
7. Obtain final authorization and sign off on all documents to complete the process
8. Congratulations! It’s time to close on your home purchase

Popular New York locations for bank statement loans

Bank statement loans are available throughout New York, but you can find several of them in the following cities

New York bank statement loan rates

Bank statement loan interest rates in New York are around 2% higher than Fannie Mae’s conventional rates. 

The interest rates on bank statement loans are typically higher than conventional mortgages because they are considered riskier. The lender doesn’t have access to your tax returns, so they can’t verify your income in the same way as with a traditional mortgage. As such, lenders charge higher interest rates to offset this risk.

Is it hard to find a bank statement lender in New York?

It can be challenging to find a bank statement lender in New York, as not all banks offer these types of loans. However, there are some banks that specialize in providing bank statement loans to borrowers who may not meet traditional lending requirements. Some of these banks include NASB, Northstar Funding, Heritage Mortgage Banking, and Cross Country Mortgage. It’s important to note that eligibility requirements and loan terms may vary depending on the lender, so it’s essential to do your research and shop around to find the best lender for your specific scenario.

If you’re having trouble finding a bank statement lender in New York, don’t worry – we can help. Our team can match you with the perfect lender for your situation by asking a few simple questions. 

Alternatives

While bank statement loans can be a good option for those who are self-employed or have irregular income, they are not the only option for a no-tax-return mortgage.

DSCR loans:  Debt Service Coverage Ratio loans a property’s ability to cover its debt payments. Instead of looking at the borrower’s income, the lender looks at the property’s income-generating potential. This can be a good option for those who have rental properties or other types of income-generating real estate.

Asset Depletion: This option allows borrowers to use their liquid assets to qualify for a loan, rather than their income. The lender will divide the sum of the assets by a certain number of months to determine an equivalent monthly income. This may be ideal for those who have a lot of liquid assets but low income. For instance, if you have saved up $1 million, that equates to an income of $8,333 per month over the course of 120 months.

Stated Income: Some lenders may offer these types of loans, which do not require the borrower to provide income documentation. However, the borrower may need to have a higher credit score and make a larger down payment.

1099 Loans: These loans are designed for borrowers who receive 1099 income, such as freelancers or independent contractors. The lender will review the borrower’s 1099 forms and use that income to determine eligibility.

P&L loans: This option allows the lender to use a profit and loss statement from the borrower’s CPA to verify income.

Hard money loans: Hard money loans are short-term financing options that are typically used for fix-and-flip properties or other types of real estate investments. They are usually more expensive than traditional mortgages but can provide quick funding for those who need it.

Pros and cons

Pros

• Easier to qualify: Bank statement loans make it easier for self-employed borrowers to qualify for a mortgage as they don’t have to rely on tax returns.
• Flexibility: You can either use personal or business bank statements to qualify and can combine W-2 or 1099 income with bank statement income as long as self-employment income is the bulk of your earnings.
• Faster approval process: The bank statement loan process is usually quicker compared to traditional mortgages as the lender only needs to review the bank statements, and not tax returns or other income documents.

Cons

• Larger down payment: Borrowers may need to provide a larger down payment to compensate for the higher interest rates and the lender’s increased risk.
• Potential stricter requirements: Since bank statement loans are riskier, lenders may require stricter requirements such as a higher credit score, more cash reserves, or a lower debt-to-income ratio.
• Limited lender options: Not all lenders offer bank statement loans, so borrowers may have limited options when searching for a lender that offers this type of loan.

New York bank statement loan FAQ

How to apply for a bank statement loan in New York

Bank statement loans can be the perfect option for self-employed borrowers in New York state who want to own a home but struggle with the documentation side. 

With bank statement loans, you don’t need to rely on tax returns, and you may receive quick approval and funding. This type of loan offers the flexibility you need to give you more control over your mortgage financing potential.