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The Complete Guide to Bank Statement Loans for Self-Employed People
Getting a loan when you're self-employed can be tough. Traditional methods like showing pay stubs or tax forms...
By: Jason Nichols on Oct 13, 2022 5:00:00 AM
Owning your own business and/or being self-employed can really have some sweet benefits. Feel like wearing sweatpants all week? Done. Want to sleep in on Tuesdays? No problem. Want to listen to Wu-Tang Clan all day at work? Queue up the 36 Chambers and set it on repeat.
Now, it’s clear that working for yourself can mean a lot of flexibility, but it can also come with some unwelcome challenges. One of which can happen when applying for a mortgage. Big banks offering traditional loans typically want to see a few recent pay stubs and a couple of W2s. This can become a challenge because small business owners and the self-employed often don’t have this. Don’t go brushing up your resume to solve this though. You can still listen to Wu-Tang in your sweatpants and get a mortgage, sleepyhead.
The solution is a bank statement loan. This type of loan uses - you guessed it - bank statements to verify the borrower’s income instead of tax returns and pay stubs. While a bank statement loan is an alternative loan, the basic premise is the same. The lender wants to check to see how much the borrower can afford and if the borrower can repay the loan. It’s key not to forget this basic principle.
Once the lender has 12-24 months of bank statements, they can calculate the borrower’s debt to income ratio. If you need a refresher on debt to income ratios, check out this blog post. They will also check your credit history.
Now that you know the basics, here are some tips to increase your chances of getting that bank statement loan approved.
I hope this blog post has helped you learn a bit more about the best ways to improve your chances of getting approved for a bank statement loan. If it’s Tuesday, go ahead and start your day with lunch.
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