Are you currently self employed and interested in buying a home, but are concerned that you may not be able to provide the required documentation you may need in order to obtain a mortgage due to your work status? Mortgage lenders typically verify a borrower’s income by reviewing pay stubs and tax returns, but this paperwork might be challenging to provide if you work for yourself. Bank statement home loans are intended to help self-employed borrowers obtain a mortgage. If you work for yourself and are interested in purchasing a home in Knoxville, Maryville, Lenoir City, Oak Ridge, or Gatlinburg, Tennessee, Foundation Mortgage can help you with your mortgage options.
The Basics of Bank Statement Loans for the Self Employed
During the traditional mortgage application process, there are certain steps that need to be taken when financing the purchase of a home, such as verifying income through pay stubs and W2s. Due to the nature of being self employed and receiving a non-traditional income, it can be difficult to provide these documents when you are self employed. A bank statement loan allows borrowers to apply for a mortgage without showing their earnings through tax documents or pay stubs. A bank statement loan uses a borrower’s bank statements to help secure a mortgage rather than using traditional income verification.
Obtaining a bank statement loan offers many benefits. Great terms and rates are available, as well as flexible options. You are not required to provide tax return information, and with a bank statement loan, you are not required to pay private mortgage insurance. Additionally, the credit score requirements are reasonable, and a borrower has the possibility to borrow up to 80% of a home’s value.
Qualifying for a Bank Statement Loan
Typically, the requirements for a bank statement loan include:
- A credit score of 600-680
- A debt-to-income, (DTI), ratio of 45%-50%
- Consecutive bank statements from the same account from the past 12 months, (applicants may qualify for more favorable rates and terms if they are able to provide 24 months of statements)
- A minimum of 2 years of self employment
- A minimum loan of $100,000 or a maximum of $1,000,000
Get Help Applying for a Bank Statement Loan for Self-Employed
If you are self employed and interested in buying a home, but have an non-traditional source of income and are worried that you may not be able to provide the necessary documentation needed to obtain a mortgage, you can still make your dream of owning a home a reality. Our loan specialists at Foundation Mortgage can help you learn more about your bank statement loan options in Knoxville, Maryville, Lenoir City, Oak Ridge, and Gatlinburg, Tennessee. Contact our office today for a consultation.