Bank statement mortgage loans are a unique type of loan and attract alternative lending options. These loans are different from traditional loans and lenders welcome less documentation from borrowers.

Bank statement loans are provided based on the cash flow showing on bank statements instead of viewing the employment records or proof of tax returns. The lender in the case of bank statement mortgage does not require the use of W-2 forms.

These loans are usually borrowed by people who want to build, purchase or refinance homes. Lenders view their bank statements as means to repay the debt service on time or not. Lenders usually ask the borrower to provide them with 12-months bank statements or 24 months to verify regular deposits. Lenders can request verification of deposits from your bank to verify the bank statements are valid.

Some Unique Borrowers of Bank Statement Loans

• Freelance employees
• Contract Workers
• Self-employed
• Business Owners
• Retired Persons
• Real Estate Investors

How are the borrowers of these loans unique?

Borrowers are unique for these loan types because they don’t work traditional 9 to 5 jobs and receive a regular paycheck every 2 weeks. These types of loans do not require any proof of employment. The purpose is to show borrowers are bringing in cash flow on a consistent basis to their bank account.

Difference between Bank Statement Loans and Traditional Loans

These loans are built for those people who do not have any kind of W-2 form and they also lack tax returns as the traditional loans ask for W-2 forms and tax returns. Moreover, these loans come with a nominally higher interest rate to accommodate the risk versus traditional loans.

Furthermore, these bank statement loans are attached with the bank statements of the person which can ensure the lender that the borrower will be able to pay back the loan.

However, in the case of traditional loans, they require a minimum down payment of 10 to 30 percent depending on the loan size. Traditional loans are only granted to those people who have a credit score of more than 700 with full documentation while in the case of bank statement loans, it is provided to those who have a credit score of at least 660.

Benefits of a Bank Statement Loan

• The lender does not ask for the tax returns.
• The lender only looks at the bank statements of the last 12 months.
• The bank statement loans can provide you with a maximum amount of $5 million.
• You can go for the fixed-rate or adjustable mortgage in bank statement loans.

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