Bank statement loans are a solid financing option for self-employed homebuyers. This loan does not require tax returns.
Lenders assess your financial situation solely based on your bank statement deposits over 12-24 months.
This opens up opportunities like potentially qualifying for more home than you could with a conventional mortgage.
If you are self-employed and considering buying a home in Texas, here is what you need to know about bank statement loans.
Start your bank statement home loan.What’s in this article?
How do Texas bank statement loans work?
Rather than relying on adjusted gross income from tax returns, bank statement loans measure your financial success through the 12-24 months of bank statement deposits.
Lenders analyze each one of your personal or business banking statements to determine average deposits.
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.
| Bank Deposits | Adj. Income on Tax Returns | |
| 2021 | $150,000 | $50,000 |
| 2022 | $180,000 | $60,000 |
| Expense ratio | 50% | n/a |
| Qualification income | $6,875/mo | $4,583/mo |
| 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.
Texas bank statement loan requirements
A bank statement loan in Texas can open up opportunities for many to buy, invest, and refinance.
- You must have been self-employed for at least 2 years.
- Down payments can be as low as 10%.
- There is no requirement for mortgage insurance.
- Your credit score must be within the range of 600-660 or higher.
- You can use the loan for purchasing a home, refinancing an existing mortgage, or taking cash out of your property.
- You only need to provide 12 or 24 months of bank statements to verify your income.
- The bank statements can be either personal or business.
- Tax returns or transcripts are not required for the loan application.
- The debt-to-income (DTI) ratio can be up to 50%.
- The loan can be used for a primary residence, second home, or investment property.
- You can combine W2 or 1099 income with bank statement income to qualify for the loan.
- The loan is available for 1-4 unit homes and both warrantable and non-warrantable condos.
- Loan amounts can go up to $3-5 million.
- As little as 3 months of reserves may be required.
Who qualifies?
Bank statement loans in Texas can be a good option for borrowers who have non-traditional income sources or who have difficulty providing traditional documentation. Here are some examples of good candidates for this loan program:
| Realtors | Business owners | Real estate investors |
| Consultants | Gig workers | Independent contractors |
| Founders | Artists | Retirees |
| Presidents | Freelancers | Contract tech workers |
| Sole proprietors | Personal trainers | Photographers |
| Self-employed doctors | Dentists | Web developers |
Almost anyone without a “regular job” could benefit.
What’s the process?
Bank statement loans can be approved faster than traditional mortgages because the process is simpler and more flexible, with less documentation required.
The smaller loan size and reduced approval requirements can also speed up the process. However, borrowers should still evaluate the loan and its terms to ensure it is the right choice for their situation.
Process steps
- Fill out a loan application with the lender to apply for a bank statement loan in Texas.
- Provide the lender with 12 to 24 months of bank statements, which will be used to calculate your income instead of relying on tax returns.
- The lender will review your bank statements and determine your income within just 2 to 3 days.
- Based on your income, the lender will determine your maximum home price or loan amount.
- If you meet the lender’s criteria, you will receive a pre-approval for the loan and can start shopping for a home.
- Once you find a home you want to buy and make an offer, the lender will work with you to finalize the details of the loan and get final approval.
- Sign final paperwork.
- Congratulations! Now, you can proceed to close on the purchase of the home.
You can also use the loan to refinance, in which case some of the steps will be different. But the approval process will look very similar.
Popular Texas locations for bank statement loans
Bank statement loans are available statewide, but are particularly popular in the following areas:
| Austin | Dallas | El Paso |
| Fort Worth | Houston | San Antonio |
| South Padre Island | Tyler | Waco |
No matter where you live in the state, there’s likely a bank statement lender near you.
Texas bank statement loan mortgage rates
Bank statement loan interest rates in Texas are around 2% higher than Fannie Mae conventional rates. The higher interest rates charged on bank statement loans in Texas reflect this additional risk that lenders take on.
With a bank statement loan, lenders rely on bank statements rather than tax returns to determine the borrower’s income. This approach can result in less verifiable income for the borrower, which increases the likelihood of loan default.
Additionally, the higher interest rates on bank statement loans may also be due to the fact that they are typically offered to borrowers who have less-than-perfect credit or have difficulty obtaining traditional financing.
Is it hard to find a bank statement lender in Texas?
Looking for a bank statement lender in Texas? There are many options, including:
- NASB
- HomeLife Mortgage
- Stonebriar Mortgage
- North Star Funding
- Citadel Servicing
- First Clear Lending
- TX Premier Mortgage
All of the above offer these loans to individuals with unconventional financial backgrounds. Don’t let your situation stop you from getting the loan that you need—there is help out there!
At My Perfect mortgage, we understand that it can be difficult to find the right lender for your needs. That’s why our team is here to help match you with the perfect lender by answering a few simple questions.
Connect with a bank statement loan lender.Finding a Texas bank statement cash-out lender
Texas has its own set of rules and regulations when it comes to cash-out refinancing.
A cash-out refinance is a type of loan where the borrower takes out additional funds beyond the amount of the existing mortgage loan. This can be used for home improvements, debt consolidation, or other financial needs.
The maximum loan-to-value (LTV) for a Texas cash-out refinance is 80%, meaning that you can borrow up to 80% of your home’s value. You must also have sufficient equity in your home and have a credit score of at least 620. Additionally, you must have a debt-to-income (DTI) ratio below 43%.
Additionally, you have to be an approved lender to offer cash-out in Texas. Few lenders in the state are both approved to do cash-out and also offer bank statement loans, but you can be matched with the right lender by submitting your loan scenario.
Bank statement loan alternatives in Texas
Individuals seeking a no-tax-return mortgage in the state of Texas have many options available.
DSCR loans
Debt Service Coverage Ratio loans are a type of loan used by real estate investors to finance the purchase of single-family, multifamily, and other investment properties. DSCR loans enable borrowers to qualify based on rental income generated rather than personal income.
Submit your DSCR loan scenario.Asset Depletion
Lenders use the borrower’s substantial assets as the basis for approval. For example, if a borrower has $1 million in savings, lenders can divide this sum by 120 months and use that number ($8,333) as an equivalent income to determine eligibility. Asset depletion mortgages are often used by retirees who no longer have an income but still have significant assets.
Stated Income
For borrowers with a strong credit score yet missing the necessary income documentation for traditional loan applications, stated income loans (or no ratio loans) are an ideal option. This type of loan allows one to obtain financing without having to disclose their debt-to-income ratio to the lender.
P&L loans
With this loan, lenders use a profit and loss statement from your CPA to verify income.
Hard money loans
Hard money loans are considered short-term financing. They provide quick funds until you can stabilize a property and refinance it into long-term financing. Note that this loan type will likely require tax returns, but hard money lenders are more lenient than traditional lenders.
Texas bank statement loan pros and cons
Bank statement loans offer many advantages, but disadvantages as well. Here are the bank statement loan pros and cons
Pros
- It’s easier to secure a mortgage without the necessity of tax returns as proof of income.
- Potential for higher loan limits
- Higher debt-to-income ratio allowed
- Fewer financial records are required
Cons
- May have higher interest rates than traditional loans, depending on lender and scenario
- Difficult to qualify if you have a low credit score
- Limited availability from lenders
- May require additional documentation
Texas bank statement loan FAQ
If you’re self-employed, you may be able to get a loan with just your bank statements. Bank statement loans allow self-employed borrowers to apply for a home loan without having to provide tax returns from the past two years.
When applying for this type of loan, lenders will use your bank statements to calculate your income and verify your ability to repay the loan. You will need to have a fair credit score, which varies by lender.
The minimum down payment for a bank statement loan in Texas varies depending on the lender. Generally, lenders require at least 10-20% of the purchase price as a down payment. It is important to note that some lenders may require higher down payments depending on the borrower’s credit score and other factors.
To qualify for this type of loan, the lender will need bank statements from the past 12-24 months to assess your eligibility for the loan. Additionally, lenders may also look at other factors such as credit score, debt-to-income ratio, and self-employment history.
See if you qualify
If you are a self-employed borrower in Texas looking to buy a home, a bank statement loan might be just the solution for you. There is better potential to become a homeowner with this type of loan.
Submit your bank statement home loan scenario.Our advise 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.
