If you want to purchase a home but can only provide a few months of proof of income, a 3-month bank statement loan could be your answer.
Whether you’re self-employed, a real estate investor, or have a similar type of alternative income, there are lenders available that can provide you with the best loan for your situation.
Here are options for 3-month bank statement mortgages and how to find the right lender and loan for you.Submit your bank statement loan scenario.
What’s in this article?
What are bank statement loans?
Bank statement loans for homebuying are a special category of mortgage product.
In general, they are ideally suited for people who either:
- Don’t have access to tax returns
- Their tax returns are not an accurate reflection of their true income
For most conventional mortgage processes, the lender will review tax returns to assess your ability to repay.
Normally, a lender will want to see anywhere from one to two years of deposit information from the business or personal accounts of the applicant (or both).
Using bank statements enables self-employed people to show their earnings before business expenses are deducted, specifically designed to lower a person’s income during tax time.
Some lenders consider only 50% of your business deposits as income, relegating the other half toward expenses.
But what if your recent history of earnings gives a much clearer picture of your income status?
For example, if a person’s business had a recent, significant, and sustainable upturn—that could be a much more accurate picture of their finances.
A higher income will increase your chances of being approved and may positively affect the amount you’d be eligible to borrow.See if you’re eligible for a 3 month bank statement loan.
Do 3-month bank statement loans have different requirements?
A lender might easily add a few extra hoops to jump through to be satisfied that you’re the right person for this loan. Let’s look at four examples.
Certain lenders might ask for a profit and loss (P&L) statement from an appropriate source to assess your income. Second, others might want a larger bank statement loan down payment and require a better credit score than with a conventional mortgage.
Third, some lenders might require the borrower to have available funds, or “reserves,” for anywhere from 6-12 months of payments. Fourth, they might need proof of being in business for at least two years.
This requirement can vary from lender to lender, including having a minimum percentage ownership of the business (e.g., an applicant must own at least 25% of the business).
Ultimately, the most successful 3-month bank statement loans will have a higher interest rate. Higher bank statement loan interest rates reflect the lender’s assessment of the applicant’s ability to repay (ATR) on a much smaller earnings period.
Learn more about bank statement loans.
Why are 3-month bank statement loans hard to find?
As mentioned above, most bank statement loan lenders base a borrower’s ATR on one to two years of deposits and financial data. Three months is a significantly shorter period, making these loans less appealing to many lenders.
This lack of information raises the odds of foreclosure for the lender, making these mortgages a riskier endeavor for them. This increased risk is often reflected in the interest rate.
Note: Remember that you, the borrower, would be taking on a risk that is not much different compared to a traditional Freddie Mac or Fannie Mae-type mortgage. Monthly payments will have to be paid on time and promptly. This payment scenario is the same no matter the mortgage you choose.
Regardless of the scarcity of these loan products, there are lenders out there who are readily willing to offer these types of mortgages to the right borrower. Lenders like these recognize that a significant portion of self-employed people out there often finds great success in their business, sometimes over a very short period.
Such a sudden successful change in fortunes may create the need to relocate quickly. This urgency might easily make a 3-month bank statement loan the best option for that scenario.
Related: Bank Statement Loan Pros and Cons
Where to find 3-month bank statement loans
Here are four examples of mortgage lenders that offer eligible borrowers 3-month bank statement loans.
My Perfect Mortgage Lender Network
The My Perfect Mortgage lender network is a great place to start. We examine your scenario and match you to a lender that can satisfy your requirements.
Our network is always growing, so there’s a good chance we have the perfect lender for you.Submit your scenario to be matched to a lender.
Nationwide Mortgage and Realty
Nationwide offers 3-month bank statement mortgages that include options for:
- Rate and term refinancing
- Cash-out refinancing
All eligible deposits for the previous three months are added up. Once deposits are totaled, business bank statements require a 50% deduction for expenses unless a letter from a CPA states the percentage of expenses.
Their 3-month bank statement mortgage allows for the following:
- 75% loan-to-value on purchases
- 70% loan-to-value on refinances
- A minimum credit score of 675
Griffin Funding offers bank statement loans, but they typically want at least 12 months of statements. However, Griffin does mention on its website that individuals with as little as one to three months of statements may have enough to qualify.
Their minimum criteria to qualify includes:
- Two years of self-employment or business ownership—or one year if you also worked for a minimum of two years before that in the same line of work
- 10% down with a credit score of 720+ (90% LTV)
- 15% down with a credit score of 700+ (85% LTV)
- 20% down with a credit score of 660+ (80% LTV)
- 25% down with a credit score of 620+ (75% LTV)
- At least three months of PITI (principal, interest, taxes, insurance) reserves in the bank for loans under $1 million, six months for over $1 million, and twelve months for loans over $1.5 million
- Loan amount cannot exceed $5 million
Who are they referring to? Mortgage Depot’s list of the best candidates for their 3-month bank statement loan includes:
- Self-employed applicants
- Small business owners
- Contract workers
- Freelancers and gig workers
While they do not directly list their credit score minimums, Mortgage Depot says that their credit score requirements are “strict.”
Submit your scenario
Even though millions of self-employed people are in America, finding the right mortgage product that matches their financial situation is challenging.
The best bank statement loans are useful to buy a home.
Without the need to produce tax returns—especially after all your business expenses have been deducted—a 3-month bank statement loan simplifies the home-buying process.Start your 3-month bank statement loan.