Breaking Down Bank Statement Loans

Defy Mortgage
Jun 14, 2023 • 2 min read
Blog Post Banners | Defy Mortgage

Providing An Alternative Verification Method for Untraditional Borrowers

Introduction

Not everyone can provide traditional mortgage documentation. Borrowers who encounter situations like this often find themselves in need of a loan but are unable to qualify for one. The good news is that there are some alternatives, such as bank statement loans, that we will delve into today.

 

The Loan Process

Bank statement loans are a form of non-QM loan, which stands for non-qualified loan. Non-QM loans are mortgages that don't fit the criteria to be considered a qualified mortgage. Because bank statement loans don't use the traditional methods to qualify a borrower, they're considered a type of non-QM loan. We talk about all things Non-QM on one of our recent blog posts if you want to learn more.

Bank statements are used to qualify, as opposed to W2s or tax returns. In turn, this makes for a faster loan process. Typically, borrowers are expected to provide 12-24 months of bank statements in order to demonstrate cash flow and income. At Defy, we offer options for both personal and business bank statements based on your unique situation and your needs.

Lenders will first review the average daily balances of accounts, then calculate a monthly income figure for underwriting purposes. This figure includes an applicant’s monthly gross income, expenses, and debts. Loan duration, down payment, and interest rate are also factored in.

 

Use Cases: Is a Bank Statement Loan Right For Me?

If your tax returns don’t adequately reflect your income, a bank statement loan might be advantageous. They are ideal for self-employed individuals, freelancers, business owners, and those who may not have traditional employment and/or income verification. Bank statement loans can be used to purchase several types of properties including primary, secondary and investment properties.

 

Benefits of Bank Statement Loans

Bank statement loans are a great option for many reasons, the first being flexibility. Not only do they require less documentation, but payment terms also tend to be more flexible.

Bank statement loans tend to be approved faster than traditional options, as they typically require less documentation. This means that borrowers can quickly and easily access the money they need.

Likewise, borrowers can often qualify for higher loan amounts than with traditional loans. This is possible because bank statements enable lenders to access more accurate information in comparison to traditionally required documents.

Finally, bank statement loans have lower barriers of entry in comparison with traditional loans. That being said, they’re appealing to an even wider audience than other loan options.

 

Defy’s Bank Statement Loan Highlights

  • Up to 90% LTV
  • Down to a 620 FICO
  • Loans up to $6M
  • Unlimited cash-out/cash in hand
  • Personal/Business Bank Statement Docs
  • Options to use a lower expense ratio
  • 12-24 months of bank statements required

 

Additional Requirements

Our mortgage consultants will review additional requirements such as deposit history, cash flow, and steady income for qualification purposes. It’s important to note that consistency is key regarding these transactions, and is a large factor in determining qualification. In addition, our mortgage consultants will also look for overdrafts and bounced checks – both of which can impact qualification.

At Defy Mortgage, we are committed to providing customized loan solutions that cater to your specific needs. Our team of skilled professionals specialize in non-QM loans, guaranteeing you exceptional service. Whatever your situation may be, we are dedicated to assisting you every step of the way. Explore our website to learn more about your loan options.

Recent Reads

Top 15 Non-QM Mortgage Lenders, Explained

Your Ultimate Guide to Non-QM Mortgage Lenders What is a Non-QM Mortgage?   A non-QM (Non-Qualified Mortgage) mortgage is a…
Read More

Can I Get a Low Down Payment On An Investment Property?

If getting a low down payment on an investment property is possible and how to go about doing it  …
Read More

No Tax Return Mortgages and Lenders

A Complete Guide to Finding No Tax Return Lenders What is a No Tax Return Mortgage?   There are various…
Read More

Stated Income Mortgages, Lenders, and Interest Rates

Your Comprehensive Guide to Stated Income Mortgages   Whether you’re a first-time or experienced homebuyer, navigating mortgage options can be…
Read More

ITIN Mortgage Loans: What You Need to Know

The Complete Guide to ITIN Mortgage Loans   If you’re a home buyer without a Social Security Number (SSN), shopping…
Read More

Bank Statement Loan Interest Rates, Explained

A comprehensive guide to understanding bank statement loan interest rates   Bank statement loans allow freelancers, gig workers, contract workers,…
Read More

DSCR Loan Down Payments: The Complete Guide (2024)

The Complete Guide to DSCR Loan Down Payments   In the world of real estate, down payments are an essential…
Read More

DSCR Loans: The Complete Guide (2024)

DSCR Loans: What Are They? DSCR loans stand for debt-service coverage ratio loans and are commonly used for investment properties…
Read More

Ready to take the next step?