No tax returns? Not a problem anymore when you are about to apply for a bank statement mortgage. This is a more suitable option among seasonal workers, contractors, gig workers, freelancers, and business owners. Generally, traditional home loans demand tax forms that the non-conventional employees require. However, the lack of W-2s or pay stubs does not create a problem. Only if you have proof of bank deposits, you can get approved for the bank statement mortgages in Houston.
The bank statement home loans in Houston are designed for self-employed borrowers who might face hiccups for the traditional home loans. They have a difficult time proving their income or expenses. For this reason, their bank statements tell the tales. For instance, an individual needs to show at least $10,000 per month in his/her personal bank statement. The amount doubles for the business bank statements. Therefore, the problem you faced while documenting your income for the traditional loans is not an issue anymore. The bank statement home loans completely take care of it from the beginning. So, let’s have a look at the essential things about the bank statement mortgage in Houston.
How does a bank statement home loan work?
For the bank statement loans, borrowers submit bank statements instead of pay stubs, tax returns, or W-2s for documenting their monthly income. One of the requirements is that the borrowers need to submit 12 months of personal or business bank statements. As most of the borrowers do not have traditional tax documents for verifying their income, it seems to be a good idea. Since the housing downturn of the past decades, the mortgage crisis has taken a plunge. In modern times, a program like a bank home loan can encourage many people who are unable to manage the income documents.
Why do borrowers need to submit personal or business statements?
The answer is simple – every borrower prefers to see whether the borrowers are financially stable or not. When you are a self-employed person running a small business and do not have personal and bank statements separately, the lender asks for the personal bank statements. Private lenders go over the profit and loss statement for ensuring that the costs remain reasonable. Additionally, they assess the bank statement to see whether the business is successfully running. In case you have two separate accounts, you may be asked to submit both the statements spanning over 12 months. However, some of the lenders often ask for three-month of business bank statements.
The bank statement home loans are known as non-qualified mortgages as they are not regarded as conventional standards. It is better to look for mortgage lenders who are exclusively willing to work on this type of mortgage lending. When you cannot qualify for traditional financing, the lenders must be willing to help you go through the special financing. Irrespective of whether you have seasonal income or are self-employed, the bank statement mortgage seems to be a great fit. Of course, don’t forget to ask your lender about the interest rate and down payment!