Georgia continually strives toward anti-discrimination and human equality, contributing somewhat to its booming housing market. Ample business opportunities and serene landscapes make Georgia a great place to call home.
Small business owners and self-employed borrowers may find ample employment and business opportunities in Georgia, but buying a home without traditional income isn’t always easy. A bank statement loan can help the self-employed borrower qualify for a mortgage loan and purchase a Georgia home.
Bank Statement Loans: Proving Your Income, Your Way
A bank statement home loan allows borrowers to prove their income in a way that works best for them. Small business owners and independent contractors may struggle to qualify for a mortgage using traditional methods. Traditional lenders often require income verification using pay stubs or W2’s, documents a self-employed borrower may not have.
A bank statement mortgage uses business and personal bank statements to verify income instead. Bank statement loans are considered non-qualified or non-QM loans, which are specifically designed to accommodate buyers who may not otherwise meet traditional lending requirements. Sometimes referred to as income loans, they can be a great alternative for unique situations.
Benefits of Bank Statement Loans in Georgia
Bank statement loans can be a great way to obtain financing when you have unique sources of income. A bank statement home loan offers the following benefits.
Ideal for Self-Employed Borrowers
A bank statement mortgage loan is one of the best financing options available for self-employed workers. Self-employed borrowers don’t always have access to W-2s or tax returns, which may be required for traditional financing. Non-QM loans are a popular home loan option for real estate investors or small business owners.
No Tax Returns Required
Many Georgia bank statement loans don’t require tax returns. Instead, an asset-based loan determines eligibility based on income via bank statements.
Flexible Underwriting Guidelines
Lenders who offer Georgia bank statement loans tend to be more flexible with underwriting guidelines. Depending on the borrower’s unique financial situation, lenders may accept a mix of business and personal bank statements. Bank statement loans may offer additional flexibility, like the option to submit a higher down payment requirement to offset a lower credit score.
Competitive Interest Rates
Bank statement loans often have competitive interest rates, especially when compared to other non-traditional financing options. The interest rate you qualify for will primarily depend on your credit score, loan amount, down payment, and the lender. Whether or not you have a co-borrower could also affect your interest rate.
Can Be Used for Primary Residences, Second Homes, and Investment Properties
A bank statement loan can be used to finance most property types, including a primary residence, second home, or investment property.
Fast Processing
Bank statement loans can sometimes be processed faster than traditional financing options. Using personal and business bank statements often makes it easier for the lender to complete income verification.
How Bank Statement Loans Work
A bank statement loan works similarly to a traditional conventional mortgage, with the exception of verifying income via W-2s and tax returns. Here is a step-by-step process of the bank statement loan process:
- Choose a Bank Statement Lender – Self-employed borrowers should choose a lender who is knowledgeable and experienced in bank statement or income-only loans.
- Get Pre-Qualified – Submit your documentation to get pre-qualified. This includes proof of income via personal or business statements.
- Find Your Dream Georgia Home – After receiving pre-approval, you can begin shopping for your Georgia dream home.
- Close the Sale – After the seller accepts your offer, you will finalize the underwriting process with your lender.
How Many Months of Bank Statements Are Typically Required
Most bank statement loans require between 12 and 24 months of personal or business bank statements. This allows lenders to review your income history and determine your eligibility for various loan programs.
How Income Is Calculated
Bank statement lenders calculate income by adding all deposits and dividing the value by the number of months. Income loans don’t consider net income, which is important since many business owners report losses.
What Types of Bank Accounts Are Accepted
Most bank statement lenders allow both personal and business bank statements. Acceptable statements must come from a traditional U.S. bank account.
Georgia Bank Statement Loan Requirements
Eligible self-employed borrowers must meet certain requirements to qualify for a bank statement loan, including the following.
Minimum Credit Score
Credit scores demonstrate your repayment history to the lender. A minimum credit score of at least 620 is usually required to qualify for a bank statement home loan. Some lenders may offer flexibility, including a higher down payment to offset a lower credit score.
Down Payment Requirements
Actual down payment requirements vary, depending on the lender, but are usually around 10% for bank statement loans. Credit scores, income, and property purchase price may also affect the down payment requirement.
Debt-To-Income (DTI) Ratio Considerations
Self-employed borrowers will also need to have a debt-to-income (DTI) ratio between 45% and 55%. DTI refers to monthly debt payments compared to income.
Here’s a brief review of the requirements for a bank statement mortgage:
- A credit score of at least 620
- At least a 10% down payment
- A DTI ratio of no more than between 45% and 55%
Eligible Property Types
Georgia bank statement loans are a great option for purchasing various property types, including the following.
Primary Residence
A bank statement loan can help you purchase a primary residence in Georgia. Many people choose Georgia to set down roots for the beautiful year-round weather, business opportunities, and progress toward equality. Some great cities in Georgia to consider calling home year-round include Alpharetta and Decatur.
Second Home
A bank statement loan can also be used to fund a second home. Second homes are properties in which the borrower doesn’t live most of the year but are also not used for income. A second home may be a vacation property. Popular cities in Georgia for a vacation home include Cherry Log or Mineral Bluff.
Investment Property
The self-employed borrower can also profit from a bank statement loan by purchasing an investment property. Atlanta is a great destination for investing in long-term rentals. Savannah is a good option for short-term investments.
Tips for Applying for a Bank Statement Loan
Are you a self-employed borrower considering applying for a Georgia home loan? Here are a few tips to get you started.
Organize Your Business Bank Statements
Organize all your business and personal bank statements before submitting them as a part of your loan application. This can speed up the mortgage underwriting process and improve your chances of loan approval.
Maintain Consistent Deposits
Consistent deposits show a steady income and give the lender confidence that you can afford your monthly mortgage payments. Borrowers with lower credit scores or insufficient deposits may require a co-borrower to qualify for a mortgage.
Prepare Additional Documentation
Some self-employed individuals may need additional documentation to qualify for a Georgia home loan. In addition to bank statements, borrowers may need personal or business expenses, profit and loss statements, and business registration information.
Work with a Knowledgeable Mortgage Broker
Bank statement loans are non-QM, meaning they’re non-traditional. Not all lenders offer bank statement mortgage loan programs. Working with a knowledgeable mortgage broker ensures you get the best interest rates. The right lender can also help ensure you qualify for a home.
Why Choose Pride Lending for Your Georgia Bank Statement Loan?
Pride Lending helps those with nontraditional sources of income qualify for home loans. Our team is committed to offering customized solutions to home lending. We work with the customer rather than the loan application.
We have successfully helped other self-employed workers obtain loans to finance their dream homes. Are you ready to finally become a homeowner?
Get One Step Closer to Owning Your Dream House With Georgia Bank Statement Loans
Bank statement loans help self-employed workers qualify for a home. Using your personal or business bank statements, we can verify your income and help you acquire your dream Georgia home.
Pride Lending takes a customized approach to financing. We offer a variety of loan programs to accommodate most buying and financial situations. Get pre-approved today using our online form, or contact our team at 725-231-0192 if you have any mortgage questions.
