Minneapolis, MN: Not everyone meets the traditional proof of income guidelines for your standard home mortgage loan. For years, the industry offered all sorts of alternative options, from no documentation stated income loans, where you just told us what you made, but didn’t prove anything, to true No Income, No Assets, no anything loans. Just a good credit score and a large down payment.
These programs served a small niche market, and had been successful for many years. In the real estate boom years from 2000 to 2007, these long held niche programs became highly abused – resulting in law changes that all but essentially made them illegal to offer.
Current rules require lenders to prove and document sufficient income to safely afford your loan payment. All your traditional loans deem that to be pay stubs, W2’s, and tax returns.
These rules leave many people out in the cold – especially the self-employed.
What No Income Documentation Loans Are Available Today?
Well, none… for owner occupied homes. For investment properties? Yes.
But there is one big non-traditional offering in the market for owner-occupied home loans, this being bank statement loans. With these programs, in lieu of traditional pay stubs, and tax returns, lenders use the deposits on your bank statements as qualifying income.
True No Proof Of Income Loans ARE available for investment property loans.
Common options include:
- qualifying on just 12 months or bank statements, but you get better interest rates if you can prove 24-months of statements.
- Using 100% of your personal bank statement deposits as income, or 50% of business bank statement deposits
The Down Side
First, there is no standard set of rules for these programs, so the there is plenty of variation between lenders. A good example is that some lenders only offer 24-month programs, or won’t do it at all with lower credit scores.
Expect at least a 10% down payment requirement, but most will require 20% to 25% down payment.
Expect closing costs to run higher than traditional loans.
Finally, as you might imagine, these programs don’t offer the best current mortgage rates. Typically we see these programs run with at least a 2% higher interest rate than traditional mortgage loans.
The Bottom Line
You should always try to be approved for traditional financing. But if your situation doesn’t allow for that, while no a full no documentation loan, at least there is an option to income qualify for a home loan with your bank statements.
Apply for a Bank Statement Loan
We here at Mortgages Unlimited offer a variety of bank statement loan options for properties located in MN, WI, and SD. Call us at (651) 552-3681 to discuss your situation – or better yet, complete the simple ONLINE LOAN APPLICATION right here on this web site.
The small print: Not an offer to enter into an interest rate lock agreement per MN law. Not everyone will qualify. Equal housing lender. NMLS 274132.