A blog from Pacific Mortgage Co

What to know about bank statement programs

What to know about bank statement programs

While being self-employed or owning your own business is a dream for many, it can create hurdles when attempting to buy a house. However, obtaining a loan is not impossible for self-employed buyers. Bank statement programs can be one of the most effective ways for potential buyers without regular income to obtain a mortgage.

Who can qualify

Self-employed professionals with an irregular income stream or significant write offs each year may benefit from bank statement programs. Entrepreneurs, freelancers, seasonal workers, small business owners, artists, promoters, or consultants are just some of the careers that could benefit from applying for a mortgage through a bank statement program.

Required documentation

Applying for a traditional loan can lead to mountains of paperwork, particularly for those who are self-employed. Bank statement programs are much simpler and only require 12-24 months of bank statements and deposits. Because tax statements and returns are not required, hard-to-document income or significant write offs are not an issue.

How it works

Bank statement programs are simple; the lender will review deposits from 12-24 months to create an average monthly income. For example:

  • January: $5,300
  • February: $8,400
  • March: $3,500
  • April: $4,200
  • May: $9,500
  • June: $5,250

The six-month average income for this example is around $6,000. The lender figures their loan pre-approval amount based on this monthly average.

Finding a bank statement program

While the basic requirements for bank statement programs are the same, the exact requirements vary from lender to lender. Just like traditional mortgage rates can vary from lender to lender; contacting multiple banks or lenders can help you find a program that offers the best terms, rates, and down payment amounts for your small business.

Owning your own business doesn’t have to preclude you from owning your own home. Bank statement programs can offer those without stable monthly income the ability to purchase their own home – while focusing on their business instead of on the paperwork.

by Author, Feb. 01, 2019

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