Bank statement loans, also known as self-employed mortgages, allow homebuyers to secure a home loan without the documentation that they generally need to verify their incomes, such as W-2s and tax returns. Also known as “alternative documentation loans”, these loans are largely used by entrepreneurs and others who don’t have a consistent income or a single employer to prove their salary.
If you also want to qualify for a home loan without providing the general documents, then bank statement home loans in Houston will be the ideal choice for you. But before you apply for this loan, let’s have a look at the types of borrowers who can benefit from this loan –
Self-employed individuals are the most common borrowers, who can qualify for a bank statement home loan. These individuals don’t have a standard income and so, can’t verify it by using pay-stubs. You may think that tax returns can meet the needs, but mortgage lenders need to use the net income you claim, not the true net income that you make. Bank statement loans make it easy for self-employed professionals to fulfill their dream of homeownership. By providing the lender with 12 or 24 months of bank statements that show the regular receipt of income, you can get a home loan. To make sure that you qualify for this loan, you should have a good credit score, plenty of money available to pay your mortgage payment in case your income falls through, as well as a hefty down payment on the house.
- Seasonal workers
There are many people in the U.S., who work seasonally. It means they spend one season to make money for the entire year. If you are a seasonal employee and want to buy a home, then a bank statement home loan will be a great choice for you. This loan allows you to document your income with bank statements. But you should hold the seasonal job for at least 2 years to use the income. The lender will annualize your income but can use any other income you bring in on a regular basis with your bank statements.
- Commissioned individuals
Commissioned individuals are the ones who get paid for making a sale. They bring in a certain percentage of the total amount of the sale. Besides, some employers also pay commissioned individuals hourly. If you are completely a commissioned employee, it could be daunting for you to get approval for a traditional loan. It is because traditional lenders will want to see your tax returns. If you work on a commission basis, you may have a lot of write-offs for your job. These write-offs will decrease the total amount of income you can use to qualify for a loan. When using bank statements to prove your income, the lender will deduct fewer expenses from your income to give you a better chance of approval.
So, if you are a self-employed professional or a seasonal worker or a commissioned individual, you can apply for a bank statement home loan, and buy a home of your dream.