California Bank Statement Loans: The Complete Guide

The Ultimate Guide to Getting a California Bank Statement Loan

For self-employed individuals living in the Golden State, California bank statement loans can be a valuable tool to help achieve homeownership. Without traditional income documentation like W2s, pay stubs, and tax returns, it can be difficult for self-employed individuals to qualify for conventional loans. 

In this guide, we’ll be covering everything you need to know about how you can get a California bank statement loan. 

Bank Statement Loans: What Are They?

Unlike traditional mortgages that rely on W2s, pay stubs, and tax returns to verify income, bank statement loans use bank statements (usually 12-24 months’ worth) to prove a borrower’s income, whether it comes from personal or business accounts. These loans are often categorized as non-qualified mortgages (non-QM), which means that they’re not constrained by the lending guidelines set by Fannie Mae and Freddie Mac. Non-QM loans are typically offered by alternative lenders rather than traditional banks. They can be used to finance various properties, including primary residences, vacation homes, and investment properties.

How Do Bank Statement Loans Work?

Once your bank statements are provided to the lender, they analyze the deposits and cash flow of your bank account to determine an average monthly income. This average monthly income is then used as a factor to further determine the total loan amount you’d be eligible for. 

Who Should Get a California Bank Statement Loan?

  • Gig workers 
  • Entrepreneurs 
  • E-commerce Professionals 
  • Individuals With Multiple Streams of Income
  • Influencers
  • Freelancers 
  • Consultants
  • Independent Contractors/1099
  • Small Business-owners
  • Self-employed Individuals such as Lawyers and Doctors
  • Artists 
  • Real Estate Investors
  • Truck Drivers   
  • Bad Credit Borrowers

A California bank statement loan can help you secure you dream home in a California city like San Francisco.

California Bank Statement Loan Interest Rates

While specific bank statement loan interest rates will vary depending on the lender, they tend to move in line with traditional mortgage rates. This means that depending on your application, bank statement loan interest rates can be very competitive given their flexibility. However, keep in mind that since bank statement loans are considered to be non-traditional, you can expect their rates to be 1-2% higher. 

California Bank Statement Loan Requirements

Each lender will have their own specific bank statement loan requirements. However, to give you an idea of what might be required, these are the requirements needed to apply for a bank statement loan at Defy:

  • 12-24 months’ worth of bank statements (personal or business)
  • Minimum FICO score of 620+
  • Up to 90% loan-to-value (LTV)
  • Loan amounts up to $6M+

Benefits of Bank Statement Loans in California 

  • Qualify without tax returns
  • Flexibility for self-employed individuals
  • Higher approval rates
  • Typically faster approval process
  • Potential for larger loan amounts depending on the lender
  • Opportunity for homeownership

California Bank Statement Loan FAQs:

What is a bank statement loan?

A bank statement loan is a type of mortgage that uses bank statements (usually 12-24 months) to prove your income rather than traditional income documents like paystubs, W2s, and tax returns.

How does a bank statement loan work?

Since bank statements aren’t as cookie-cutter as traditional income documents, lenders analyze your bank deposits to assess your average monthly income and cash flow to determine loan approval. 

Who could qualify for a bank statement loan? 

A bank statement loan is ideal for self-employed individuals or those with irregular income streams that aren’t easily verifiable. This could include freelancers, small business owners, gig workers, and more. 

Should I get a bank statement loan if I live in California?

If you’re self-employed and living in California, bank statement loans could be a great alternative option for you. While you should still consider your own unique financial situation, applying for a bank statement loan can save you time by getting a pre-approval the first time. 

What are the alternatives to California bank statement loans?

Some bank statement loan alternatives that you can get in California are:

  • FHA loans
  • VA loans
  • Conventional loans
  • Asset depletion options
  • Debt-service coverage ratio (DSCR) loans
  • Interest-only loans
  • Profit & Loss (P&L) loans
  • Foreign national loans

What is the difference between a bank statement loan and a profit & loss loan?

Bank statement loans analyze your deposits and spending activity on personal or business bank accounts. Whereas a profit & loss (P&L) loan analyzes a business’s profit & loss statement that summarizes income and expenses. 

What are the requirements for California bank statement loans?

Specific bank statement loan requirements vary between lenders. However, these are the requirements we have at Defy:

  • 12-24 months’ worth of bank statements (personal or business)
  • Minimum FICO score of 620+
  • Maximum loan-to-value (LTV) of 90%
  • Loan amounts up to $6M+
  • No tax returns required

What documents do I need to qualify for a California bank statement loan?

Similarly to the loan requirements, the specific documents needed to qualify may vary depending on the lender. However, at Defy, we would require:

  • Identification documents
  • 12-24 months’ worth of bank statements (personal or business)

What are the credit score requirements for California bank statement loans?

Credit score requirements may vary based on the lender, but at Defy, we require a minimum credit score of 620. 

Can you get a California bank statement loan for an investment property?

Yes! You can get a bank statement loan for an investment property. 

How much of a down payment do you need for a California bank statement loan?

Down payment requirements may vary depending on the lender, but you can expect to put down anywhere between 10-30% based on qualification factors. At Defy, we require a minimum of 10% down for bank statement loans. 

Is a bank statement loan considered a non-QM loan?

Yes, bank statement loans are considered non-QM loans. 

What are the interest rates for a California bank statement loan?

Interest rates vary between lenders, but may be slightly higher than conventional loan rates depending on certain factors. 

Where can I get a bank statement loan in California?

Bank statement loans are offered in California by specialized non-QM lenders and brokers. Defy happens to be one of them! Get a preapproval today to get one step closer to your dream California home. 

Can I get a bank statement loan in a state other than California?

Yes! Bank statement loans are available in all 50 states, including: 

  • Texas
  • Florida
  • Georgia
  • Tennessee
  • Colorado

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