Bank statement loans allow you to secure a mortgage without the documentation that you would otherwise need to submit to verify your income. Also familiar as “alternative documentation loans”, these loans are mainly used by entrepreneurs and others who might not have consistent income or a single employer to prove their salary.
Anyone who can prove that they can repay what they own can almost qualify for bank statement home loans in Houston. But to secure the loan program, you have to fulfill some requirements. Here are these.
- · 2 years of self-employment
To get bank statement loans, self-employed individuals need to be self-employed at least for 2 years. While some lenders care more about this factor than others, it is important to qualify. You have to prove that you have been self-employed for at least 2 years. And to do so, give local documentation stating that you operate your own business. Most mortgage lenders will accept a business license as proof. But others demand documents, which state you are still in the business currently. After all, many entrepreneurs fail to manage often fail to manage businesses past the start-up stage. Ask your mortgage lender what their specific self-employed documentation requirements are that you need to fulfill to get a home loan.
- · Bank statements
As the name suggests, self-employed borrowers also have to offer their bank statements to get a bank statement loan. Carry both a hard and soft copy of your personal and business bank statements. Lenders need between 1 to 2 years of deposits. Some lenders allow self-employed individuals to use solely personal bank statements while others ask for business bank statements. If you would like to use a portion of both, there are lenders who allow the usage of both. After collecting your statements, decide which one will offer you the best financial reputation. Then, find a lender who will accept the statements that you chose. In order to secure bank statement loans, self-employed professionals require business and personal bank statements.
- · Credit score
Being a self-employed professional, you need to provide lenders with their credit to secure bank statement loans. Unlike some other loan programs, the minimum requirement for credit scores for bank statement loans varies. Some lenders demand high credit scores for reassurance while others accept self-employed individuals who have credit scores of 550. So, you can receive bank statement loans even if you struggled financially in the past. In order to enhance your chances of getting accepted with a low credit score, explain why your score is low to the lenders. If you have gone through a bad time in your business, provide them with proof. Show them how you managed to work through it. By doing so, you will increase your value as a borrower and as a consequence, receive a bank statement loan to fulfill your needs.
These are the basic documents that are required to secure the home loan. Prepare these documents and show them to your lender to qualify for the loan swiftly.
Author Bio: Joan Gallardo, a Senior Loan Officer, with 20+ years of experience, here writes on 2 questions to ask the best mortgage lender in Houston when you are about to choose one of the first time home buyer programs in Houston.