Frequently Asked Questions About Bank Statement Loans

Bank statement loans are type of loan that uses 12-24 months of a borrower’s bank statements, not their tax return, to determine if they qualify.  This option provides a path for small business owners to get a mortgage if they’ve been turned down because of their W2.  

Here at A Nightmare on Loan Street Blog, we get a lot of questions about bank statement loans.  We’ve covered a lot of the basics about bank statement loans here  and here.  Some of you have sent me pictures of those blog posts printed out, key areas highlighted, and questions written in the margins.  Just because it’s my mom and dad who did that still counts.  But I did want to answer some frequently asked questions that may pop-up about bank statement loans.  Let’s begin…

How many months of bank statements do I need to qualify?

Typically 24 months of bank statements are needed, but some lenders will use 12.

Why do lenders look at my bank statements?

Since your tax return won’t tell the bank about your finances, the lender needs something that will.  They’ll look at the deposits each month and come up with an average monthly income using your bank statements.  This helps them determine your debt to income ratio and how much you can afford.  

What is a Debt to Income Ratio?

A Debt to Income ratio shows the amount of monthly debt you have (car payments, bills, etc…) each month compared to how much income you generate.  For an in-depth review of the Debt to Income Ratio, check out this blog post.

Will I qualify if I have bad credit?

While a higher credit score is better, you can still qualify with a score as low as 580.  Just keep in mind that a larger down payment may be required with a very low credit score.

Do I have to be self-employed?

To qualify for a bank statement loan, at least one borrower will need to be in business for a minimum of 2 years.

What kind of homes can I purchase?

Single family, townhomes, condos are all homes you can purchase with a bank statement loan.

Does the home need to be my primary residence?

No, you can get a bank statement loan for secondary/vacation homes or investment properties.  Just keep in mind that payment requirements might be a bit higher for investment properties.

I’m sure there are more questions that are out there about bank statement loans.  The good news is that if you have them, the team at Truss Financial Group can help answer.  Don’t hesitate to reach out if you have additional questions!