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It is common for homebuyers to verify their income using tax returns and W-2s. However, not all borrowers can prove their income and assets this way. A bank statement loan allows self-employed borrowers, entrepreneurs, small business owners, and freelancers to get a mortgage without traditional documentation.
With this loan, a high debt-to-income ratio is allowed and the loan can be used on primary residences, second homes, and investment purchases. Besides, it offers high loan limits. Are you eager to apply for bank statement home loans in Houston? Opt for a reputable lender and apply for the loan. However, do you know what are the requirements that you have to fulfill? Here are the ones –
- Proof of income
It is the initial requirement that you have to meet to get approval for this loan. Lenders offer different types of bank statement home loan programs to the homebuyers, including 12-month of bank statement and 24-month of bank statement. While the former one asks for a statement for the last 12 months, the latter one would ask for statements for the last 24 months. Some lenders also offer a 1-month bank statement, but it is exceptional. Find out your requirement to know which type of loan you should apply for.
- Good credit score
A credit score as low as 500 would be enough, based on the mortgage lender to get approval for a bank statement home loan program. Others may ask for a high credit score to approve. Bring a borrower; it is your responsibility to improve your credit score as much as possible before approving for the loan. The higher the credit score, the better it would be for you. With a higher credit score, you can apply to various lenders and then opt for the one, who is offering a better rate.
- Decent down payment
An important step to buying a home is to find out how much you need to save for the down payment. It would also depend on the lender and your credit score. Generally, the down payment range from 10 to 30 percent. The requirement can vary from lenders to lenders. However, you should keep this in mind that higher down payment amounts are preferred by lenders. So, try to save as much as possible for the down payment.
- Other requirements
You will also be given a form that you need to fill out when applying for this loan program. Other requirements that you need to meet are Social Security card, valid identification cards or a driver’s license, home insurance, in case there is any, assets that will include your retirement plan or your savings, for those with businesses, a copy of your business permit or license may be needed.
These are the basic requirements that you have to fulfill as a homebuyer to get approval for the loan. Some lenders may ask you to meet some additional requirements. Ask them about these and work accordingly.