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Bank Statement Loans offer a clear path to homeownership. Clear Rate Mortgage is here to guide you pre-qualify now or call 888-573-2640.
What is a bank statement loan?
Bank statement loans are a special type of mortgage that looks at your banking history to check if you can afford the loan.
These loans let you qualify based on your actual cash flow shown in bank statements. This works great if you don't have the usual income proof that most lenders want.
What truly sets a bank statement loan apart is the way lenders look at your bank deposits over 12 to 24 months to figure out your average monthly income.
Your financial health and mortgage payment ability become clearer through this method, even without the usual income proof.
How it is different from traditional mortgages
Traditional mortgages need lots of paperwork like tax returns, W-2 forms, and pay stubs to check your income. Bank statement loans mainly look at your bank transactions and cash flow instead.
The application process becomes simpler for people who don't have regular jobs.
Clear Rate Mortgage helps clients understand these options and guides them through the process.
Why self-employed borrowers use it
Self-employed borrowers often find tax returns don’t reflect their true income because of deductions. Bank statement loans solve this by focusing on actual deposits, helping small business owners, freelancers, and gig workers show their real ability to pay.
Clear Rate Mortgage has guided many through this process, making homeownership possible even with irregular income.
How do bank statement loans work?
Bank statement loans work differently from conventional mortgages. They have unique documentation requirements and specific ways to calculate income.
Our team at Clear Rate Mortgage knows these details inside out and will guide you through the process.
What documents are required
Bank statement loans need a longer banking history compared to traditional mortgages. You'll start by providing personal or business bank statements that show steady income deposits.
The lender might also ask for:
- Business documentation (licenses, articles of incorporation)
- Proof of business ownership
How lenders calculate income
Lenders look at your bank statements in several ways to figure out your qualifying income. They add up all deposits over the review period and divide by the number of months to find your average monthly income.
Bank statement loan requirements
Bank statement loans need you to meet specific criteria that lenders use to assess risk. Clear Rate Mortgage reviews several key factors to determine if you qualify.
Minimum credit score and down payment
Lenders need a credit score starting from 620. Your credit profile affects how much you need to put down borrowers usually need between 10% to 20% of the home's purchase price.
Debt-to-income ratio limits
Your debt-to-income (DTI) ratio is vital for bank statement loans. This ratio shows how much of your income goes toward debt payments.
Most lenders want ratios below 43%. Notwithstanding that, some programs through Clear Rate Mortgage may accept up to 50% DTI. Self-employed borrowers get more flexibility compared to conventional financing.
Business documentation and licenses
Bank statement loans require proof of business ownership. You'll need documents like business licenses, organizational paperwork, or tax ID numbers.
Cash reserves and profit/loss statements
You'll need liquid assets or reserves beyond your down payment to cover potential financial disruptions.Many lenders also ask for profit and loss statements to verify your business's financial health.
Pros and cons of bank statement home loans
Bank statement loans are a double-edged sword if you have self-employment income. Clear Rate Mortgage's guidance helps borrowers understand both sides to make better decisions.
Advantages for non-traditional earners
Bank statement loans work great for freelancers, entrepreneurs, and business owners who take full tax deductions. These loans also come with flexible qualification rules.
Higher interest rates and down payments
The flexibility of these loans comes at a price. Lenders charge this premium because alternative income verification carries more risk.
Prepayment penalties and other risks
Many bank statement loans include prepayment penalties during the first few years. Borrowers with up-and-down income face bigger risks of payment troubles during slow periods.
Clear Rate Mortgage wants you to understand these factors before getting a bank statement home loan.
Clear Rate Mortgage: Your Guide to Bank Statement Loans
At Clear Rate Mortgage, we understand that every borrower’s path is unique. Our team makes the bank statement loan process clear and manageable with open communication, fast updates, and guidance that always puts your needs first.
You can feel confident knowing we focus on transparency, not empty promises, while helping you move toward your homeownership goals. Ready to take the next step? Call us today at 888-573-2640 or pre-qualify now!
FAQs
1. Can I use personal and business accounts together for a bank statement loan?
Yes, some programs let you combine both if they clearly show your income flow. A lender will review the deposits across accounts to confirm consistency.
2. Do bank statement loans work for someone with seasonal income?
Yes, they can help if your income changes during the year. Lenders look at overall patterns instead of only one slow period.
3. Can first-time buyers use bank statement loans?
Yes, these loans can be an option for buyers who don’t have traditional income proof. They allow you to qualify based on deposits instead of tax forms.
4. Do bank statement loans require a specific type of job?
No, they are open to many types of self-employed work. What matters most is showing steady deposits over time.
5. Can I refinance with a bank statement loan?
Yes, these loans can also be used for refinancing. They follow the same process of checking your banking history for income verification.
