Bank Statement Loans Deliver Flexibility

Bank Statement Loans Offer Competitive Rates and an Easy Application Process for Self-Employed Borrowers

Good news! You can still qualify for a mortgage loan even if you declare negative income on your federal income taxes. At Modern Lending, our 12-month bank statement loan program does not require any federal income tax returns for verification. Instead, we factor in all of the deposit amounts accumulated in your bank statements over the last year as verification of your income. Our Bank Statement Loan program does not require Private Mortgage Insurance (PMI) and there is no maximum loan limit. Borrowers can apply from $250,000 and up to $10,000,000. However, a downpayment of between 10-20% will be needed to qualify. The down payment and mortgage rate are based on your credit score.

The Bank Statement Loan Process

Self-employed borrowers only need to provide the following documents:

• 12-24 months of bank statements to provide verification of deposits
• Proof that your business has been in existence for at least 2 years

Don’t Let That Stop You From Applying For a Mortgage Loan

Watch this short video now to learn more about how Bank Statement Loans work and see why Modern Lending is closing 5 times more loans for self-employed homeowners in 2022 than in any previous year.

Scenario examples of potential borrowers

Scenario # 1: A husband or wife is self-employed and their spouse is a w2 employee

• The self-employed borrower will provide 12 to 24 months of personal or business bank statements (where ever they deposit their business revenue)
• The W2 employee borrower will provide 2 years W2s and the last two paystubs
• If a borrower owns 100% of their business, the income for the self-employed borrower will be calculated by adding up all of the customer deposits for the last 12 or 24 months and then reducing that amount by 30% – 50% to determine the qualifying income that can be used for a mortgage loan.
• The bank statements of the borrower must show consistent income to prove they are regularly earning money (not just one or two large deposits a year)
• The income for the self-employed borrower and the W2 salary borrower will be combined to determine the total qualifying income.

Scenario #2 Both borrowers are self-employed for at least two years in separate businesses

• Each self-employed borrower will need to provide 12 to 24 months of personal or business bank statements (where ever they deposit their business revenue)
• If a borrower owns 100% of their business, the income for the self-employed borrower will be calculated by adding up all of the customer deposits for the last 12 or 24 months and then reducing that amount by 30% – 75% to determine the qualifying income that can be used for a mortgage loan.
• If the borrower only owns 50% of the business then the amount determined using the model above will be divided in half. 
  • Example: business deposited $200,000 over the last 12 months.  The owner owns 50% of the business and it is a consulting business.  70% of $200,000 is $140,000 (this is the income that could be used IF he/she owned 100% of the business. This amount is then reduced by 50% so only $70,000 can be used.

• The bank statements of the borrower must show consistent income to prove they are regularly earning money (not just one or two large deposits a year)

• The exact process is repeated for the other self-employed borrower and the results of each income calculation are combined together to determine the qualifying income for both borrowers.