BANK STATEMENT LOANS
A Flexible Mortgage Option for Self-Employed Borrowers
Being self-employed can make qualifying for a traditional mortgage more complicated. Business deductions that reduce taxable income may also make the income shown on your tax returns look lower than the cash flow your business actually generates.
A bank statement loan offers an alternative way to document qualifying income.
Instead of relying primarily on traditional tax-return income calculations, qualifying income may be determined using deposits shown on personal or business bank statements.
At Platinum Lending Solutions, we work with multiple wholesale lenders offering bank statement mortgage programs for qualified borrowers in Oregon and Washington.
1
Review Statements
Personal or business bank statements may be reviewed over a specified period.
2
Analyze Deposits
Eligible deposits and applicable business expenses may be analyzed.
3
Establish Qualifying Income
The lender uses the program’s calculation method to determine qualifying income.
What Is a Bank Statement Loan?
A bank statement loan is a type of non-QM mortgage commonly designed for self-employed borrowers whose tax returns may not fully reflect the income available to qualify for a mortgage.
Depending on the loan program, a lender may review a specified period of personal or business bank statements and calculate qualifying income based on eligible deposits and applicable business expenses.
Program requirements vary by lender, property type, occupancy, credit profile and other factors.
Bank statement loans are one of several specialized mortgage loan options available for borrowers with nontraditional income documentation.
Alternative Documentation — Not No Documentation
A bank statement loan isn’t a way to avoid documenting income.
It provides an alternative method for documenting and calculating qualifying income when traditional mortgage underwriting may not accurately represent a borrower’s financial picture.
Bank Statement Loan Programs May Be Available For
Primary Residences
Second Homes
Home Purchases
Who May Benefit From a Bank Statement Mortgage?
Bank statement financing may be worth considering if you are self-employed, have established cash flow and have difficulty qualifying based on the income shown on your tax returns.
Business & Professional
• Business owners
• Independent contractors
• Consultants
• Freelancers
Other Self-Employed Borrowers
• Real estate professionals
• Commission-based self-employed borrowers
• Other borrowers with established self-employment income
How Do Bank Statement Loans Work?
Traditional mortgage underwriting typically evaluates self-employed income using tax returns and applies specific calculations and adjustments to determine qualifying income.
Bank statement programs take a different approach.
Depending on the program, a lender may analyze eligible deposits over a required statement period to establish qualifying income.
When business bank statements are used, an expense factor may be applied to account for the costs of operating the business.
Some programs may allow different methods of determining business expenses when supported by acceptable documentation.
Because these calculations vary among lenders, the same bank statements can potentially produce different qualifying income with different loan programs.
Bank Statement Loan Requirements
There is no single set of requirements that applies to every bank statement mortgage.
Bank statement mortgages are generally considered non-QM loans, so interest rates, fees, equity requirements and underwriting standards may differ from conventional financing.
Lenders May Consider
✓ Length and stability of self-employment
✓ Personal or business bank statement history
✓ Eligible recurring deposits
✓ Business expense calculations
✓ Credit history and credit score
✓ Down payment or available equity
✓ Cash reserves
✓ Property type and occupancy
✓ Loan amount
✓ Overall borrower financial profile
Bank Statement Loans vs. Conventional Mortgages
A conventional mortgage may still be the better option when a self-employed borrower can qualify using traditional income documentation.
The advantage of a bank statement loan is flexibility.
Traditional Documentation
Conventional Mortgage
Traditional mortgage underwriting typically evaluates self-employed income using tax returns and applies standard income calculations.
This may be appropriate when taxable income accurately supports the requested mortgage.
ALTERNATIVE DOCUMENTATION
Bank Statement Mortgage
For a business owner with substantial legitimate business deductions, traditional underwriting may calculate considerably less qualifying income than the business’s cash flow might suggest.
A bank statement program provides another method of evaluating that income.
That doesn’t automatically make a bank statement loan the best choice.
Whenever possible, we can evaluate both traditional and alternative-documentation options to determine which approach makes sense for your circumstances and financing goals.
Why Lender Selection Matters
Bank statement programs can vary significantly from one lender to another.
Different lenders may use different methods for evaluating deposits, calculating business expenses, handling unusual or non-recurring deposits, determining reserve requirements and establishing loan limits.
As an independent mortgage broker, Platinum Lending Solutions can evaluate programs available through multiple wholesale lending sources rather than relying on a single bank’s guidelines.
That flexibility can be particularly valuable with non-QM financing, where the way a lender evaluates a self-employed borrower’s income can affect the available options.
Bank Statement Loans in Oregon & Washington
Platinum Lending Solutions helps self-employed borrowers throughout Oregon and Washington evaluate traditional and alternative mortgage options.
If your tax returns don’t appear to tell the complete story of your income, we can review your financial picture and determine whether a bank statement mortgage or another loan program may be appropriate.
Could a Bank Statement Loan Work for You?
If you’re buying or refinancing a home in Oregon or Washington and traditional income documentation isn’t a good reflection of your financial situation, let’s take a closer look.
Tell us a little about what you’re trying to accomplish, and we’ll help you explore the mortgage options that may fit.
Ready to Review Your Options?
Start with a conversation about your income, business, property and mortgage goals.
