3 Month Bank Statement Mortgage for Self-Employed Borrowers
Are you looking for a 3 month bank statement mortgage? Qualifying for traditional loans can be a hurdle for the self-employed because underwriters start by calculating income based off taxable income. Eligible mortgage options include:
- Purchases.
- Cash out refinances.
- Rate and term refinances.
The 3 month bank statement loan helps eligible self-employed borrowers qualify without tax returns – income is calculated based off of bank statement deposits.
Calculating Income for 3 Month Bank Statement Loan
Income for a traditional loan is calculated by an underwriter, which they often use Form 1084, Cash Flow Analysis, for self-employed income. If applicable, business tax returns are going to play a factor when calculating income on top of personal tax returns.
For the 3 month bank statement mortgage, all eligible deposits for each month are added up. Once the deposits are added, the business bank statements require a 50% deduction for business expenses unless a CPA letter states the percent of expenses.
Advantages for 3 Month Bank Statement Mortgages
- Less paperwork.
- May be able to show more income only using 3 months.
- More lenient on sourcing deposits than the 12 and 24 month bank statement loan.
Advantages to the 12 and 24 Month Bank Statement Loan
- Lower down payment options.
- Allowed to cash out up to a higher loan-to-value.
- Lower credit score requirements.
- Usually better terms than the 3 month bank statement mortgage.
Personal and Business Account’s Bank Statements
The 3 month bank statement mortgage allows:
- 75% loan-to-value on purchases.
- 70% loan-to-value on refinances.
- Starting at 675 credit scores.
Before calculating income for the 3 month bank statement loan, it is important to go over other options before choosing this loan program. Alternative options may be a better option when it comes to terms of the mortgage.
Other Alternative Income Loans
- Debt-service coverage and no ratio mortgage for investment properties.
- FHA streamline refinance.
- Fix and flip and new construction loans for investment properties.
- No doc mortgage for all occupancy types.
- VA streamline refinance.