Bank Statement Loans: What You Need to Know

In the last post, we touched on a doctor who ended up getting a bank statement loan.  Since then, the emails have been pouring into A Nightmare on Loan Street Blog’s inbox.  Most of them are junk mail telling me about mail order brides, but that’s not important.  I did get one from an actual person who asked me more about the BSLs or bank statement loans.  BSLs is what they call them on the streets.  

I figured that a post or two on the nitty gritty of bank statement loans could really go a long way for anyone who might be in the same situation.  So buckle up!  Especially if you are in the car.  

To review, a bank statement loan is where the lender uses your bank statements instead of your tax return when determining if they are going to lend you money.  This might be helpful if you are self-employed, own real estate, run a cash business, or don’t pay yourself much on your W2.

There are a few different categories of information that I’ll break down for you below.  These are all things that may come into play if you are seeking a bank statement loan.

Your Credit Score

Just like basketball, Rummy 500, and the check you got from grandma for your birthday, the bigger the number, the better.  In real terms, a lot of lenders will be looking for a FICO score of at least 580, but some will work with 500 or above.  

It’s important to note that if your credit score is on the lower side, you might need a higher down payment.  Which brings me to my next topic…

The Down Payment

This is easy for me.  I usually just remember the percentage of women that agree to go on dates with me…so 10-20%.  If your credit score is below 580, be prepared for closer to 20%.

Loan Amount

There are a lot of numbers with this one.  It helps to be Rainman.  Or you can just save this blog post as a favorite.  Either way, K-Mart sucks.  

Let’s start at the top.  Most of the time, the maximum is going to be $2,000,000 for a bank statement loan.  Some lenders will allow up to the legal maximum allowed of $3,000,000.  

The minimum is $100,000.  If your needs don’t require a loan of this amount, bank statement loans are not a good fit.  Like that time I tried skinny jeans.  Ouch.  

Bank Statements

Ahhh, finally!  You may have been wondering at this point, why didn’t they call them “Credit Score Loans” or “Down Payment Loans” or “Loan Amount Loans”.  The first two make a lot of sense, but were you really thinking “Loan Amount Loans”?  Makes no sense at all.  Might be time for more coffee.

In all seriousness, the bank statement is the crux of this type of loan.  You’ll need anywhere from 12-24 months worth of bank statements to provide to the lender.

You can also use business and/or personal accounts for this.  If you use a business account, just keep your CPA in the loop, because you might also need a P&L.  

So that’s the skinny on bank statement loans.  It was actually kind of a lot of information, so I’m going to take a well deserved nap.  But if you need more information on this, be sure to reach out to the team at Truss Financial Group.