Bank Stated loans new alternatives for self-employed mortgages
Find Out if You Qualify
What is a bank stated loan?
In the past, bank stated loans for mortgages did not require documentation or income verification. Lenders only needed to know the borrower’s income, hence the term “stated income loans”. These risky loan types led to 2008’s housing market crash. As a result, banks stopped issuing stated income loans. This prevented banks from selling undocumented loans in the secondary market.
This loan product was transformed by the 2010 Dodd-Frank Act. Borrowers can no longer take out a home loan unless they have proof that they are able to repay the loan. The proof must be fully documented by lenders and the borrowers must submit all documentation. Statement income loans do not require income documentation or tax returns from self-employed borrowers. Dodd-Frank made it illegal for anyone to obtain this type of loan for an owner-occupant property.
To qualify for a conventional mortgage, the documentation required by an average employed borrower includes W-2 forms and tax returns. Because their income can change, self-employed borrowers will have to provide more documentation. For income loans, lenders don’t require income verification or documentation. They prefer that borrowers have good credit scores, large reserves, and a substantial down payment. A better financial picture for lenders will make you more likely to get approved and receive favorable interest rates.
How do you get qualified for a bank stated loans?
Bank stated loans are required to offset the risk taken by your mortgage lender.
- Save a lot
- Credit score of 700+ is required
- You will need bank statements
- High income
Are bank stated income loans a good option for you?
These loans are used by many borrowers to purchase another rental property or to flip a property they wish to sell. These loans are also used temporarily by borrowers who have a large cash advance but cannot pass up on an investment property.
Some investors aren’t willing to spend all of their money to purchase a property. Instead, they use income loans to save some capital for future investments.
Are there any loans for stated income?
The most recent housing crisis saw the rise of no-doc mortgages. At that time, borrowers were able to obtain mortgages without needing to submit income documentation. These loans were eventually discontinued by lenders.
Alternatives to self-employed mortgages
Alternative loans can be obtained that have similar characteristics to stated income loans. These loans are often referred to as “alternative Income Verification Loans”, which are also known as “alternative documentation Mortgage Loans” or “bank statement loans programs”. They all refer to the same loan product, so let’s just call them bank statements loans. This loan program is best for borrowers who have multiple sources of income, such as self-employed borrowers.
Quick Quote: Let us give you some options on Bank Stated Loans to buy a house or investment property.
Program for bank stated loans
For self-employed borrowers, this loan type is flexible and affordable. A bank statement loan allows borrowers to purchase or refinance a house without needing to submit tax returns or other documentation. These loans are easier to get than the standard stated income loan. You can finance an owner-occupied house without worrying about Dodd-Frank legalities.
How do you qualify for a bank statement loan?
These are the requirements for the bank statement loans program.
- You must be in business for at least 2 years
- Minimum credit score of 600+
- Documents such as the following should be provided:
- Your business license
- Statements from the bank for 12 months personal and 24 months business
- Ratio of expenses
- A signed CPA letter attesting that you are still in business
Is it just a myth that Bank Stated Loans are back?
The mystery isn’t a mystery anymore, absolutely yes these programs are really back in a different form. Private banks, private equity investors, and hedge funds are pooling together funds to offer non-QM loans which is another term for a bank-stated loans for self-employed borrowers the category this loan program now falls under.
Rates, well the rates are a little bit higher compared to a conventional qualified mortgage, however, the flexibility and loan approval options have really enabled self-employed borrowers to leverage their assets to acquire new assets and even cash out refinance existing properties in less than 30 days. Bank stated loans take less time in underwriting because there are fewer items to review and banks have created specialized underwriting teams to expedite these types of loans. In fact, some programs offer investor options so investors can purchase up to 5 properties under the bank-stated loan program. Furthermore, the bank stated loans have cash-out options up to $1,000,000 cash out to the property owner.
In some cases, depending on the nature of the case we can approve and fund within 2 weeks. The only challenge is getting the appraisal done which today’s current turnaround times are 3 to 4 weeks, but if you’re willing to pay an expedite fee to the appraisal company, they will move your case to the front of the list like a fast pass at Disneyland. There’s no limit to achieving homeownership dreams anymore and business owners who need cash flow to increase expand their businesses or to purchase capital equipment bank stated loans are becoming the new way to get instant access to your equity and build your asset portfolio.
Change your mindset when it comes to borrowing money for your business, tap into the equity of your home and let bank-stated loans get you to cash fast to achieve your goals at reasonable interest rates, much better rate than your credit card or line of credit from the bank. Mortgage rates are at an all-time low and are probably one of the best ways to write off the interest expense of the loan. Please consult with your financial advisor before making any decisions. We feel confident your advisors and family will like this product.
Find out what you qualify for today to get the best mortgage rate on your new home or investment property!