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SELF-EMPLOYED?  

WE HAVE MORE REASONS TO SAY YES.

WATCH A VIDEO ABOUT THIS PROGRAM

So you might be asking, "what happens if my business is operating with expense ratio lower than 50%?"

Great question.  Many businesses operate with an expense ratio well below 50%.  If that's the case, simply provide a letter from a licensed tax professional that states the accurate expense ratio for your business.  For example, if your business is operating at a ratio of 30%, then you can multiply the figure in step 4 above by 70%.  If it's 25%, then multiply by 75%, and so on...

There are no prepayment penalties for owner occupied and second homes, so the loan can be refinanced if desired, as soon as the applicant qualifies for a traditional home loan.  Many of our clients use this program to buy their dream home and decide to refinance it into a traditional loan once they and their tax advisers determine the optimal time.  It allows the business owner to take control and buy a home on their terms.

Get to know more with free info and resources to help you quickly get familiar this exciting program--check out our Bank Statement Loan Video Workshop.

Some lenders may offer this type of program, but few of them offer the educational resources and experience, making us a trusted leader in Bank Statement Home Loan financing.

BANK STATEMENT HOME LOANS

USE THE DEPOSIT INCOME FROM YOUR BUSINESS BANK STATEMENTS TO QUALIFY FOR A HOME LOAN INSTEAD OF TAX RETURNS.

 

WE SIMPLY CALL IT THE BUSINESS OWNER'S SECRET WEAPON.


Are you Self-Employed for at least 2 years? Have you been denied for a traditional home loan by your bank or credit union because you "didn't show enough income on your tax returns?"

 

You're not alone.  This happens to business owners from coast to coast.  The reason has to do with the way banks are forced to count your income using the taxable income on the business owner's tax returns. The US tax code allows business owners access to a set of rules that serve as a tax defense strategy.  Tax professionals have an entire industry dedicated to lowering the tax burden of business owners.  Operating a business with an aggressive tax strategy means life is great for the business owner....until they go to apply for a mortgage!  


THE PARADOX OF BEING SELF-EMPLOYED...

While business owners have a set of tax rules, so do the banks and credit unions. On a "traditional" home loan (such as a Conventional, FHA, VA or USDA program) banks and mortgage lenders are only allowed to use your tax returns to determine your ability to make the monthly payments on a new mortgage.

 

In short, if you tell Uncle Sam that you're 'broke' on your tax returns, your bank or credit union will see it the same way. And that's how many business owners see their applications denied.

 

THE SOLUTION: THE BANK STATEMENT LOAN.

Our bank statement loan program solves this problem.  Rather than using tax returns, we allow the business owner the ability to use the ordinary business deposit income in their bank statements as the income on the new loan. We find that it often provides a more accurate portrait of the applicant's true income profile and business profitability.    

HOW DOES IT WORK?

The calculation process is simple and straight-forward.  Here's how we calculate the qualifying income on a Bank Statement Loan:

  1. We review the most recent 12-24 months of your business bank statements, counting all of the ordinary business deposits.
  2. Divide the figure ($) by the number of total bank statements being reviewed.
  3. Multiply this figure X your ownership percentage (%) in the business.
  4. Multiply this number X 50% (this is a default business expense ratio that is applied to the income)

And that figure becomes the monthly income for your new loan.  

 

CPA Letter

At a Glance

Minimum Down Payment

10% - for loan sizes ranging from $125,000 - $3MM

FICO of 740+

Reserves:

6 months up to $1MM loan size
9 months up to $2MM loan size
12 months up to $3MM loan size

15% - for loan sizes ranging from $125,000 - $3MM

FICO of 700+

Reserves:

3 months up to $1MM loan size
6 months up to $2MM loan size
9 months up to $3MM loan size
)

 

PMI (Private Mortgage Insurance)

None

 

Minimum mid-credit score

600

 

Min/ Max Loan Amount

$150,000 - $3MM

 

Loan Repayment Terms

30 years

 

Amortization

30 Year Fixed Rate / 5/1 ARM /  7/1 ARM 

Prepayment Penalties

None for Owner-Occupied Homes or Second Homes.

Investment properties Only -  6 months interest on 80% of the original principal balance

 

Recent Housing Events

Min 24 months - OR-1 day minimum (See Loan Originator for details)

 

Max Seller Contributions

6% for Owner-Occupied or Second Homes

2% for Investment Homes

 

Escrows

Escrows for Property Taxes and Home Insurance required

 

Occupancy

Primary Residence / Second/Vacation Home / Investment

 

Acceptable Property Types

Single Family, Townhome/ Villa/ Condominium/ Condotel or Non-Warrantable Condominium

 

UNACCEPTABLE Property Types

Manufactured Homes, Modular Homes, Mobile Homes, Raw Land, Condotels, Log Homes, Dome Homes, Tiny Homes, Commercial Mixed-Use

 

Other

We accept 1099 Independent contractors for Cannabis-based businesses.

FREQUENTLY ASKED QUESTIONS (FAQ)
Get answers to common questions from business owners just like you.

Are you a 1099 Employee or Independent Contractor?  Did you know that there is a program designed for your type of income?

Check out our 1099 INCOME PROGRAM.

LEARN MORE

NEW APPROVAL GUIDELINES
(effective 07/05/2023)

KEY FEATURES

  • Low Down Payment- as little as 10% down required.
  • Flexible income calculation
  • Flexible credit score requirements– scores as low as 620. (loan size and reserve restrictions apply, see below)
  • Reserves: The amount of reserves depends on the credit score, LTV and the loan amount.
    • 10% Down Payment - for loan sizes ranging from $125,000 - $3MM
    • Middle FICO of 740+
      • Required Reserves:
        • 6 months up to $1MM loan size
        • 9 months up to $2MM loan size
        • 12 months up to $3MM loan size
  • 15% Down Payment - for loan sizes ranging from $125,000 - $3MM
  • FICO of 700+
    • Reserves:
      • 3 months up to $1MM loan size
      • 6 months up to $2MM loan size
      • 9 months up to $3MM loan size
  • We offer loan amounts as low as $100,000.  For loan sizes $100,000 - $124,000 - See Originator for program details
  • Gift Funds from a family member are acceptable (borrower must demonstrate that they have at least 5% of the purchase price and reserves of their own funds) Consult your Loan Originator
  • Interested Party Contributions (IPC's)- up to 6% of the purchase price.  This includes credits from sellers, real estate agents, builders, etc.)  For Investment Properties - the max contribution is 2% of the purchase price.
  • Occupancy: Owner Occupied, or Second/Vacation Home, or Investment Homes
  • Eligible Home types: Single family homes, Townhomes / Villas, 2-4 Unit Multi-family, condominiums (both warrantable and non-warrantable
  • Unacceptable home types: condotels, mobile homes, manufactured homes, modular homes, dome homes, tiny homes
  • Cannot be used to fund the construction costs of a new home. You can use this program to buy a home from a builder, as long as the builder is fronting the cost of construction, and you're buying the home from their inventory when the home is certified as ready to occupy.

Minimum Mid-credit score and Down Payments (for loan amounts ≤$1MM):

  • 740+  - Max 90% LTV  (10% Down Payment)
  • 700+  - Max 85% LTV  (15% Down Payment)
  • 660+  - Max 80% LTV  (20% Down Payment)
  • 620 – 659  - Max 75% LTV  (25% Down Payment)

This is not a commitment to lend.  Not all borrowers will qualify for the loan programs listed.  All program terms and conditions are subject to change and may be discontinued without prior notice.  Contact loan originator for program questions and scenarios.