Bank Statement Loans: A Path to Homeownership for the Unconventional Earner
Traditional mortgages rely on pay stubs and tax returns to assess your ability to repay a loan. But what if your income doesn’t fit neatly into those categories? Freelancers, consultants, and small business owners often face challenges proving their income stability through the standard channels. This is where bank statement loans come in, offering an alternative path to homeownership for those with less conventional income sources.
What are Bank Statement Loans?
Bank statement loans, also known as stated income loans, are a type of mortgage that uses your bank statements, rather than tax returns and pay stubs, to verify your income. Lenders will typically look at 12 to 24 months of bank statements to analyze your deposit history and get a clear picture of your income flow.
Who Can Benefit from Bank Statement Loans?
If your income falls outside the realm of traditional W-2 employment, a bank statement loan might be a good option for you. Here are some groups that can find this type of loan beneficial:
- Self-employed individuals: Freelancers, consultants, and independent contractors often have fluctuating income. Bank statement loans can account for this variability.
- Business owners: Owning a business can come with significant tax write-offs that don’t reflect your true earning potential. Bank statements can provide a more accurate picture.
- Those with recent income changes: If you’ve recently started a new business or switched careers, your tax returns might not reflect your current income level. Bank statements can help bridge this gap.
Is a Bank Statement Loan Right for You?
If you have a strong income history demonstrably through your bank statements and fall into one of the categories mentioned above, a bank statement loan could be a viable option for achieving homeownership. However, it’s crucial to compare rates and terms from multiple lenders and weigh the pros and cons against conventional loans before making a decision. Consulting with a mortgage broker experienced in bank statement loans can be a valuable resource in navigating this process.
REMEMBER – Not all lenders offer Bank Statement Loans so you may need to shop around for a qualified lender who can line you up with this type of loan. At Secured Lending Group we can definitely help with this.
