Bank Statements = Proof of Income
It’s an exciting time in the mortgage business, as there are more and more ‘niche’ loan programs being introduced every day. Once of those recently introduced loan programs, the one we will be discussing today, will actually allow you to use bank statements to prove income!
Gone are the days where you have to provide tax returns, pay stubs and W2 forms to get a mortgage.
Now there are mortgage lenders that will allow you to qualify using either 12 or 24 month’s worth of bank statements. Some banks will allow personal bank statements, some business and some both. So, instead of the bank calculating your income based off of those traditional means, they’ll now average your total deposits over the past year or two and divide to get your new (and most likely higher) monthly income figure.
For example, if Bob owns a shipping company and his company has $100,000 in deposits every month, along with $99,000 in expenses/withdrawals, his qualifying income would be $50,000 a month! (50% of $100k gross monthly deposits) Compare that to the net of $12,000 Bob is claiming on his tax returns (how most other banks would calculate his income) and Bob just got a $49,000 a month raise! That’s real income that could be used to qualify for a bigger home for Bob and his family.
Ask any self-employed person if their bank deposits are higher than their adjusted gross income, and you’ll almost always receive a resounding YES! Now, ask that person (it could be YOU) if they think they’d have a better chance getting approved with more income showing or less income showing. Right! More income is always a plus, making this new niche mortgage program a huge hit with business owners and cash wage earners alike.
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One last point: Please keep in mind that these programs are NOT available through your traditional, walk-in banks or mortgage lenders. You’ll need to speak to a reputable, knowledgeable mortgage broker in your area today in order to get all of the finer details.