Bank Statement Loans for The Self Employed
Self-employed individuals have long struggled to take out traditional loans. Many have their income fluctuate from month to month, and due to their deductions and the expenses they write off, their net income often falls short of what conventional loan programs require.
While this has always been a problem in the lending world, the rapid expansion of the gig economy means that the need for loan options that work for the self-employed is greater than ever. This is where bank statement loans come in.
What is a Bank Statement Loan?
A bank statement loan is a loan that is issued based on bank statements rather than tax returns as proof of income. They can be usedfor a variety of purposes, including purchasing property. This type of loan has technically existed for some time, but most lenders were hesitant to offer them. However, as the need has grown, United Direct Lending has become more flexible.
What type of Properties Are Eligible?
Bank statement loans can be used for single family residences, condos, townhomes, and multifamily homes not exceeding four units.
What Loan Terms Are Available?
Bank statement loans are offeredwith four different terms: 30 years fixed, 15 years fixed, sevenyears adjustable, and fiveyears adjustable. Which termsare correct for you will depend on your individual circumstances.
What if My Credit Is Low?
Having low credit is not always a problem. While most lenders will not offer a bank statement loan to those without good credit scores, we are able tolend to those with a FICO score as low as 560, assuming the bank statements document sufficient income. The rules regulating bank statement loans do vary by state, so the mandatory minimum credit score varies.
What if I’ve Been Late on My Mortgage?
The lender will evaluate this on a case-by-case basis. If you have been consistently late in making payments, the loan will likely be denied. However, if this is a rare occurrence and ultimately, your payments are always made, the lender may see this as acceptable for issuing a bank statement loan.
What About Recent Credit Events?
While the lender will apply their ownstandards, industry regulations are quite lenient on credit events and bank statement loans. You may be eligible for a bank statement loan as soon as one day out from a bankruptcy or foreclosure.
Bank Statement Loans and United Direct Lending
Here at United Direct Lending, we can verify your income for a bank statement loan using either 12 months of personal bank statements or 24 months of business bank statements. With a bank statement loan program, we can offer you loanson owner-occupied properties, vacation homes, and investment properties. We also offer financing on Air BNB and other vacation rental properties. When opting for a privatemoney or hard money loan, propertiescan be owner-occupiedas long as there is a business purpose for the cash-out. We can offer hard money loans on residential, mixed-use, and commercial properties.
To learn more about bank statement loans, speak with one of our loan experts.