Self-employed borrower with excellent credit whose income stated on their tax return won’t qualify them for the luxury home they can afford. Qualify with 100% on Personal Account Deposits and 50% on Business Account Deposits (12 consecutive months).
Prime Bank Statement
1) Max. Loan Amount $2M;
2) Max. LTV 85%;
3) Min. Fico 660;
4) Min. Reserve 6 Months;
5) No Tax Return;
6) No MI (Mortgage Insurance).
Expanded Bank Statement
1 Yrs Self-Employed / Manufactured Home Available:
Max LTV 70% for Purchase; 65% for Refi.
Prime Bank Statement
★Max DTI 48%
★Cash out proceeds can be as reserves. Max Cash In Hand:$1M
★12 months PITIA on the subject property and 2 months PITIA on the properties owned by borrowers.
★Borrower minimum contribution 5%
★VOD with one month bank statement is acceptable.
★Non-occupant co-borrowers, guarantors and co-signers are ineigible.
★Forbearance must currently be reinstated.
★If using personal bank statement to qualify the loan, qualifying income is equal tothe total monthly deposits from business divided by 12 months without the consideration of expense factor, but with 3 months business bank stmt required to support.
★If using business bank statement to qualify the loan, qualifying income is equal tothe total monthly business deposits divided by 12 months with the consideration of 50% expense factor, or with CPA Letter/ P&L to support expense factors.
Expanded Bank Statement / CPA P&L
★2 Months Incremental PITIA required per other Financed Property
★Stocks/Bond/Mutual Funds - 90% of stock accounts may be considered in the calculation of assets for closing costs and reserves.
★Vested Retirement Account funds – 80% may be considered for closing and/or reserves.
★When bank statements are used, large deposits must be evaluated. Large deposits are defined as a single deposit that exceeds 50% of the total monthly qualifying income for the loan.
★Loan amounts ≤ $1,500,000 = 1 Full Appraisal (ARR, CDA or FNMA CU Risk score of 2.5 or less is required in addition to appraisal)
★Loan amounts > $1,500,000 or "flip" transaction = Two Full Appraisals
★Max Mtg Late 0x30x12
★Bankruptcy/Foreclosure/Short Sales/Deed-in-Lieu ≥3 Years.
★Prepaid Payment Penalty is the 5% of the remaining loan balance.
Why do we choose Bank Statement?
Even though most home owners can easily qualify with full documentations for a conventional mortgage, many still don't fit the Fannie and Freddie guidelines when it comes to the lending requirements. Luckily, Non-QM loans and bank statement income documentation are great solutions for these non-traditional borrowers.
Self-employed wage-earners have the luxury to write off many business expenses under the IRS Tax Code. Writing off business expenses from their gross income help the borrowers significantly reduce their tax liabilities, and sometimes it shows an overall loss or negative income for the year. Bank Statement Non-QM Loan will be able to help these borrowers to qualify for a mortgage without showing their tax returns and use their bank statements to show the true cashflow of their business.
Who is this program designed for?
This program is designed for borrowers who are self-employed and would benefit from alternative loan qualification methods. Bank statements may be used as an alternative to tax returns to document a self-employed borrower’s income. Besides, personal and/or business bank statements are all allowed.
At least one of the borrowers must be self-employed for at least 2 years (with 25% or greater ownership) to qualify for this program. This is a standard requirement to determine if the borrower is a self-employed borrower. In agency loans, we always refer to K-1 or Schedule G; while for Non-QM loans, we always need a CPA letter to verify the actual ownership.
Usually, the lender would calculate the qualifying income by taking the average value of bank statement deposits in 12 or 24 months, then multiple a standard expense factor. That should be the borrower’s qualified income for this program.
As for the expense factor, many Non-QM investors may have a standard ratio like 50%. Though this is also our standard requirement, but if your CPA can provide a letter with appropriate reasons, we may take considerations for a flexible expense factor due to the nature of the business has minimum expenses.
Please contact our team for a free analysis of the income before submitting the loan for you to better assist your clients.