15 Jan How Do Bank Statement Loans Help Self-Employed Individuals?
If you are self-employed or a business owner, there comes a time when you want to purchase your dream home or refinance the existing one. However, since you are self-employed and you do not have salaried income, getting qualified for bank statement loans can be easier than qualifying for a traditional home loan.
Self-employed individuals benefit from these types of loans most. Non-qualified loans have recently taken over the outstanding traditional income loans as an option for business owners who are not in the position to verify their monthly income.
Typically, bank statement loans allow you to verify your income using your bank statement. Nobody will bother you about employer records and employment history. This type of credit has come as a huge relief for self-employed individuals.
They are the most common type of non qm loans out there. So, how can self-employed individuals benefit from these loans? Read on to find out.
The Benefits of a Bank Statement Loan
Lenders use your deposit history for the past 12-24 months to determine your eligibility for other loans. Most lenders will need to see a consistent flow of cash into your business or personal bank account for you to qualify for a bank statement loan.
A bank statement loan can help self-employed individuals in the following ways:
- You can use your bank statement loan to qualify for a mortgage
- You are eligible for business loans that can help you push your hustle to the next level
- You can still qualify for a mortgage even if you recently faced foreclosure or recently
- A bank statement loan can help you get home loans with as little as a 3% down payment
- Self-employed individuals enjoy the option of either an adjustable or fixed-rate non qualified mortgage loans
3 Types of Bank Statement Loan Programs
Self-employed individuals have three primary types of bank statement loan programs designed to help them. They include:
- A Business Bank Statement Loan: If you are self-employed, you can apply for this type of loan using your 12 or 24-month bank statement. In such cases, only 50 % of your deposits are considered as income.
A lender can only consider more than 50% of your deposit as profit if you can prove it by providing the profit and loss statements for the same period.
- Personal Bank Statement Loan: You can apply for this loan using your 12 to 24-month bank statement just like a business bank statement loan. When applying for a personal bank statement loan, the lender will consider all of your deposits as income.
• One-Month Bank Statement Loan: A business owner can apply for a one-month bank statement loan using the most recent bank statement. The bank statement must indicate a positive balance, and the individual will be required to prove and declare the qualifying income.