Minneapolis, MN: Not every potential home owner fits the cookie cutter guidelines for most traditional loans, like standard 30-yr fixed rate loans backed by Fannie Mae or Freddie Mac, or standard government backed loans like FHA Loans, VA Loan, or USDA loans.
The mortgage industry had plenty of alternative options back in the day, including bank statement loans, stated income, no proof of income loans, asset based program, and more, right up until the housing crash in 2007.
Government mandated changes after the housing crash left many home buyers needing these alternative loan programs with no loan options whatsoever. Slowly, the non-conforming loan industry is making a comeback, albeit looking much different than years ago.
Stated income loans existing, but are super restrictive. No doc, or no proof whatsoever of income loans do not exist. The most popular alternative documentation loan option that HAS returned is using your bank statements as qualifying income.
These bank statement loans come in many varieties, but generally consist of the following basic requirements:
- Must be self employed
- Use 100% of personal bank statement deposits as income
- Use 50% of business bank statement deposits as income
- Higher credit scores
- Loans of 80% loan-to-value or less
- Interest rates 1% to 2% higher than standard loans.
There is no one set of rules, like you find with standards loans that all lenders use for things like FHA, VA, Fannie Mae, Freddie Mac, etc. Because of this, you will find all sorts of variations between lenders offering bank statement loan programs.
But the good news is that at least there are some options again for those home owners who don’t fit the traditional loan model.
Equal Housing Lender. NMLS 274132. Not everyone will qualify. Not an offer to enter into an interest rate lock agreement. iMortgageJoe.com