Qualification for a jumbo loan can be complicated, but with bank-statement loans, you have a better chance at mortgage approval, allowing you to secure the top-quality loan you need for a wonderful home.
This program is available for self-employed borrowers who may have difficulty with mortgage approval due to complications that come from an irregular income. Best of all, if specific conditions are met it allows for up to $2 million in financing with no reserve requirements.
Bank-Statement Jumbo Loans Can Bring Up to $2 Million in Mortgage Financing
There are numerous advantages to using these bank-statement jumbo loans for large purchases. First of all, there is no minimum trade-in requirements, which is a benefit that comes from Desktop Underwriter (DU). Also, you will not have to show a housing history; essentially this means that you won’t have to generate 12 months worth of cancelled checks just to show that your rent or mortgage was paid over the past year.
With DU, there is no minimum reserve requirements and no derogatory credit criteria.
This program also gives you options. With bank-statement jumbo loans can choose a 5/1 adjustable-rate mortgage, a 7/1 adjustable-rate mortgage, or a 30-year fixed-rate mortgage. These options give the program greater flexibility and allow you to choose the right loan to fit your specific needs.
The debt-to-income ratio, which is always important to lenders, is only 45%. This is right around the general requirements for most home loans, which, while not overly lenient, shows the program is not excessively restrictive.
Also, the bank-statement requirements and income analysis are essentially the same as the expanded-access criteria, which means approval should not be overly complicated.
Using Banks-Statement Jumbo Loans for a Home Purchase
With this program, you can purchase a home using 12 or 24 months of personal bank statements for qualification. This can significantly reduce time for approval and create a more convenient mortgage-application process.
While you can use 12 or 24 months of personal bank statements, there are restrictions. First of all, co-mingling of personal and business receipts and expenses is not allowed with this program. If there is evidence of co-mingling, the loan will need to be submitted and qualified as a bank-statement loan for a business, which can create its own set of approval complications. Also, bank statements will need to be the most recently available at the time of application. Essentially, this means that if you have bank statements from the past 12 months, you must use them and not bank statements from two years ago. Also, the bank statements must be consecutive. Regardless of the time period and the length (12 or 24 months) they must be back-to-back statements with no months missing in the timeline.
You may need to provide validation of a minimum of two-years existence of the business, which can be proven through a business license, letter from a tax preparer, or an article of incorporation, as well as other possible documents.
There will also be an income analysis that is required. For this program, qualifying income will be calculated based on the lower of either the monthly average from the bank statements or the monthly income that is disclosed in a signed 1003 form.
It’s also possible that 24 months of business bank statements will be required. However, borrowers who own three or more businesses may skip this step, and bank statements must be the most recent available, just like personal bank statements. Also, multiple bank accounts can be used to complete this step.
Depending on the situation, you may also be required to bring a deposit analysis. If you are using transfers from another bank account, you will be required to provide evidence that the source of the transfer is related to your business.
Property Requirements for the Bank-Statement Program
Before you can utilize the bank-statement jumbo loan, the lender will have to make sure that the property being purchased will be eligible for the program. To do this, you will first need to have an appraisal completed on the property. Unless ordered by the borrower, assigned appraisals are acceptable for these loans. The seller, however, is responsible for the condo project review if one applies to the property being purchased. Interior photos will be required, and two appraisals must be delivered from independent parties in certain situations. Also, legal non-conforming zoned properties must indicate that the subject property can be rebuilt if it has been severely damaged or needs significant repairs.
A third-party appraisal review will also be required in some cases. For this, a Collateral Underwriter (CU) score, which measures risk on a scale of 1 through 5, will need to be provided. If a loan has a CU score of 2.5 or higher, the seller will need to meet additional requirements in order to complete the transaction.
Using Business Bank Statements Will Require P&L Analysis or an Earnings Summary
If you need, you can use bank statements from your business, but you will have to provide certain information to ensure the lenders are not taking too much risk. A profit & loss statement or an earnings summary may be required, and if this document is prepared by the borrower, they will need to sign it. The bank statements from the business will need to cover the same general timeframe that is covered by the personal bank statements.
The expense ratio also will need to be appropriate for the business or industry. For example, certain professions can be reasonably expected to have low expenses, while other businesses, such as a retail business with a fleet of vehicles, could have much larger expenses. If the file you bring to the lender does not have a P&L statement prepared by a certified accountant, the lending professional will have to evaluate reasonable expenses for that industry.
Get the Right Information on Using Bank Statements to Qualify for a Jumbo Loan
You deserve to use all your available resources to qualify for a top-quality loan. Contact our staff today and we’ll make sure you are fully informed on the use of bank statements for mortgage qualification.
Whether you are seeking for your first home or a luxury vacation property, we’ll make sure you are fully informed on all your options!
