Self-employed and bank statement loans
If you own a business or work for yourself, tax returns can show less income than you actually bring in. Some lenders offer loans that look at other documents, such as business or personal bank statements.*
How it works
- A standard loan usually relies on tax returns and pay records. A bank statement loan usually uses a period of bank deposits, often 12 or 24 months, to estimate income instead.
- These loans are different from standard conforming loans, and requirements vary by lender. Ask each lender what it accepts and what each option costs.
- Federal law still requires the lender to make a good-faith effort to confirm that you can repay the loan, whatever documents it uses.
What to have ready
- Recent bank statements for the accounts you want counted.
- Business license, a CPA letter or other proof the business is active, if the lender asks.
- A list of monthly debts, and the down payment source.
Compare
Loans that use alternative documents can have different pricing, down payment and reserve requirements than standard loans. Compare the Loan Estimate for each option, and ask whether a standard loan could work for you if you have two years of tax returns.
Questions to ask a lender
- Which documents can you use to count my income?
- How does the rate and down payment compare with a standard loan for me?
- Is there a prepayment penalty?
- What are the rate, points and closing costs on my Loan Estimate?
Sources
* General information only, not a loan offer, a commitment to lend or advice. Program rules, limits and fees are set by the agencies above and can change. Eligibility, rates and approval depend on credit, income, the property and the lender, and are not assured. Sinjo Thomas, NMLS #2680792, C2 Financial Corporation, NMLS #135622. See disclosures.
Talk to Sinjo at C2 Financial Opens C2 Financial's website.