Being self-employed is empowering—it offers flexibility, autonomy, and the chance to follow your passion. However, when it comes to securing a mortgage, self-employed individuals often face unique challenges. Enter bank statement loans, a solution designed specifically for entrepreneurs, freelancers, and business owners.

Let’s dive into how bank statement loans work and why they might be the right fit for you.

How Do They Work?

When applying for a bank statement loan, here’s what you can expect:

• Income Verification Through Bank Statements:
  • Lenders typically require 12 to 24 months of bank statements to evaluate your income.
  • Both personal and business bank statements may be accepted, depending on the lender’s criteria.
• Income Calculation:
  • For personal accounts, lenders often use your total deposits as income.
  • For business accounts, a percentage of your deposits (usually 50-70%) is considered to account for business expenses.
• Credit Score and Down Payment:
  • While requirements vary, most lenders prefer a credit score of 620 or higher.
  • A down payment, often between 10-20%, is typically required.
• Other Documents:
  • Some lenders may ask for proof of self-employment, such as a business license or CPA letter.
  • You’ll also need a strong debt-to-income (DTI) ratio to qualify.

Why Choose a Bank Statement Loan?

Bank statement loans offer several advantages for self-employed borrowers:

• Flexibility: The ability to use bank statements instead of tax returns means you don’t need to worry about deductions affecting your income qualification.
• Higher Loan Amounts: Self-employed borrowers often qualify for higher loan amounts because lenders focus on gross deposits rather than taxable income.
• Customizable Terms: These loans often come with more flexible underwriting guidelines, giving you the ability to tailor your mortgage to your needs.

Challenges to Consider

While bank statement loans provide a valuable solution, they aren’t without potential drawbacks:

• Higher Interest Rates: Because these loans fall outside traditional guidelines, they may come with higher interest rates.
• Larger Down Payments: To offset the risk, lenders usually require a more substantial down payment compared to conventional loans.
• Limited Lenders: Not all lenders offer bank statement loans, so finding the right one might take some research.

Who Can Benefit Most?

Bank statement loans are ideal for:

• Small business owners
• Freelancers and gig workers
• Independent contractors
• Real estate investors
• Anyone with inconsistent or seasonal income

Tips for Securing a Bank Statement Loan

• Organize Your Finances:
  • Keep detailed, consistent records of your deposits to make the underwriting process smoother.
• Improve Your Credit Score:
  • A better credit score can help you secure more favorable loan terms.
• Work With a Mortgage Professional:
  • A knowledgeable broker can guide you through the process and connect you with lenders who specialize in bank statement loans.
    

Is a Bank Statement Loan Right for You? 

If you’re self-employed and struggling to fit into the box of traditional mortgage requirements, a bank statement loan could be your key to homeownership. By focusing on your true financial picture rather than rigid documentation, these loans provide an opportunity to achieve your dreams—whether that’s buying a home, refinancing, or investing in property.

At Fresh Home Loan, we specialize in helping self-employed borrowers navigate unique financing options like bank statement loans. Reach out today to explore your options and discover how we can help you secure the home loan that works for your business and lifestyle.

For more information contact Garrick Werdmuller: https://freshhomeloan.com/schedule-a-meeting/
Garrick Werdmuller
garrick@freshhomeloan.com
1151 Harbor Bay Parkway Suite 136
Alameda CA 94502
(510) 282-5456

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All loan approvals are conditional and not guaranteed and subject to lender review of all information. Loan is conditionally approved when lender has issued approval in writing, but until all conditions are met, loan cannot be funded. Specified rates and [products may not be available to all borrowers. Rates subject to change according to market conditions and agreed upon lock times set by borrower. Fresh Home Loan Inc. is an Equal Opportunity Mortgage Broker in California. This licensee is performing acts for which a real estate license is required. Fresh Home Loan, Inc. is licensed by the California Department of Real Estate #02137513 NMLS # 2124104

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