Nevada is making strides toward greater inclusivity and equality for all, contributing to a thriving housing market. Ample business opportunities and outdoor recreation also make it a desirable place to call home.
Is owning a home in Nevada a part of your dreams? Has being self-employed stopped you from becoming a homeowner? With bank statement mortgage loans, self-employed borrowers can finally purchase a home.
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Bank Statement Loans: Proving Your Income, Your Way
The bank statement loan program verifies income using bank accounts rather than W-2s or tax returns, making them ideal for borrowers with non-traditional income sources, such as freelancers, self-employed professionals, and business owners. Bank statement mortgages review personal and business bank statements, offering greater accessibility to individuals who might struggle to qualify for traditional loans and ensuring a more accurate assessment of their ability to repay.
Personal bank statements are any accounts in your personal name. This may include checking or savings accounts. Business bank statements show business income and expenses. Buyers who are considered self-employed may have an overlap of accounts, which means submitting both could improve your odds of a loan approval.
Benefits of Bank Statement Loans in Nevada
Bank statement loans are a great alternative to more traditional financing methods, especially for self-employed individuals. Bank statement mortgage loans offer the following benefits:
Ideal for Self-Employed Borrowers
Bank statement loans are ideal for self-employed borrowers. Those who are self-employed, whether small business owners or independent contractors, may find it difficult to prove income using traditional methods even though they may have sufficient income to qualify for a mortgage. They just can’t prove it using traditional methods.
The bank statement program offers a flexible solution for buying a home. If you have sufficient income to cover the monthly mortgage payments, you have a good chance of qualifying.
No Tax Returns Required
Many traditional mortgage lenders also require tax returns. However, small business owners and self-employed individuals often qualify for tax write-offs, which can lead to an inaccurate reflection of finances. Additionally, some tax situations, including pass-through taxes or mixed bank statements, can make it more difficult to qualify for a mortgage.
Accepting bank statements in lieu of pay stubs or tax returns can make the path to homeownership easier for Nevada buyers.
Flexible Underwriting Guidelines
Bank statement loan programs typically have more flexible underwriting guidelines than other loan options. Self-employed borrowers who may not qualify for a mortgage can complete the income verification step using bank statements rather than pay stubs or tax returns.
Additionally, many bank statement lenders offer further flexibility, including a higher down payment to compensate for a lower credit score or more income to offset a lack of W-2s. Working with an experienced lender is important when considering alternative loan options like a self-employed mortgage.
Competitive Interest Rates
Bank statement loans can also qualify for competitive interest rates, which means a lower monthly payment and less interest paid over the loan’s lifespan. Other factors that may influence interest rates include credit score, down payment, and the specific lender.
Can Be Used for Primary Residences, Second Homes, and Investment Properties
The great thing about the bank statement home loan program is that it can be used to purchase various property types. With sufficient bank statements, borrowers can purchase a primary residence, second home, or investment property in Nevada.
Fast Processing
The bank statement program can sometimes be faster to process than a traditional mortgage loan. Lenders can quickly verify income using personal and business bank statements, eliminating the need for W-2s or tax returns. If you have previously organized your personal or business statements, you can speed up the timeline to a loan approval.
How Bank Statement Loans Work
Here is what you can expect when you choose a bank statement loan for your Nevada home purchase:
- Review Your Loan Options as a Self-Employed Buyer – Before applying, make sure a bank statement home loan is right for you.
- Gather Your Documents – Gather your documents before applying to help streamline the process. The self-employed borrower typically needs proof of income and expenses, usually through bank statements.
- Apply for Pre-Approval – Submit your online application to apply for pre-approval. If you qualify, you will receive pre-approval with a maximum loan amount.
- Shop for Your Nevada Home – Begin shopping for your Nevada home.
- Complete Underwriting and Close the Loan – After submitting your offer, it’s time to close the loan. Alternative documentation loans typically require a review of business and personal bank accounts to ensure you can afford the monthly mortgage. Following closing, you can plan your move. Congrats! You’re officially a homeowner.
How Many Months of Bank Statements Are Typically Required
Bank statement loans typically require 12 to 24 months of business and personal bank statements to verify income. The self-employed borrower can speed up the underwriting process by including 24 months of statements when applying for the loan.
How Income Is Calculated
Unlike stated income loans, bank statement loans still require borrowers to verify their income. Lenders calculate income by taking the total sum of all deposits over a 12 or 24-month period and then dividing it by the number of months for an average amount. This number depicts the borrower’s income and will determine the maximum loan amount.
What Types of Bank Accounts Are Accepted
A bank statement loan can be considered for both business and personal bank statements. Collecting personal and business income statements helps buyers qualify for loans based on income verification.
Nevada Bank Statement Loan Requirements
Bank statement loan borrowers will still need to meet certain eligibility requirements, which often include the following:
- A minimum credit score of at least 620
- A down payment of at least 10%
- A debt-to-income (DTI) ratio of no more than 45%
- At least 12 to 24 months of bank statements
Minimum Credit Score
A minimum credit score of at least 620 is usually required for bank statement loans. Some lenders may require a higher credit score. Lower credit scores usually result in higher interest rates, so improving your credit before applying can be beneficial.
Down Payment Requirements
Most lenders require a down payment, including bank statement loans. The minimum down payment is usually 10% but may vary, depending on the lender.
Debt-To-Income (DTI) Ratio Considerations
A debt-to-income (DTI) ratio of no more than 45% is usually a requirement for a bank statement loan. Lenders want to ensure borrowers can comfortably afford their mortgage payments, which means having a high income-to-debt ratio. Some lenders may be willing to accept a higher DTI with a higher down payment.
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Eligible Property Types in Nevada
The bank statement loan program can help Nevada buyers acquire various property types, including the following.
Primary Residence
A bank statement loan is a great way to purchase a primary residence, a home where you spend most of your time. In Nevada, a primary residence is a property the homeowner exclusively occupies.
Second Home
A bank statement mortgage loan can also be used to purchase a second home in Nevada. A second home can be a great family asset and may be somewhere that you and your family vacation regularly. Popular second-home locations in Nevada include Carson City and North Tahoe. Even those who own homes in other states may consider Nevada for a second home purchase.
Investment Property
Nevada offers many investment property opportunities. Las Vegas draws millions of tourists each year, and Henderson and Paradise have a market for long-term renters. Business owners can use the bank statement home loan program to acquire an investment property and increase their earnings even more.
Tips for Applying for a Bank Statement Loan
A self-employed mortgage is a great way to purchase a property in Nevada. Here are a few tips to make the loan approval process easier.
Organize Your Business Bank Statements
While you don’t need tax returns or W-2s to apply for a bank statement loan, you will need up to 24 months of bank statements. Organize your bank statements before submitting them to the lender to help streamline the process. Include both personal and business bank statements that show an accurate depiction of your finances.
Maintain Consistent Deposits
Consistent deposits can improve your chances of being approved for a bank statement loan. Make sure your bank statements show regular money deposits over a two-year period.
Prepare Additional Documentation
You may need additional documents to qualify for a bank statement home loan. Some lenders may require a profit and loss statement, expense report, or business registration.
Work with a Knowledgeable Mortgage Broker
Not all lenders offer access to the bank statement program. Make sure you choose a knowledgeable mortgage broker who can help guide you through the process.
Why Choose Pride Lending for Your Bank Statement Loan?
Pride Lending understands that no two buyers are the same, so we work hard to meet a wide range of financing needs. Depending on your income and financial situation, a bank statement home loan may not even be the best loan option for you. Pride Lending works with self-employed and small business owners to help connect them to the best loans with the most competitive rates.
At Pride Lending, we offer a customized approach to home loans in Nevada, with a special focus on serving under-represented communities. When you choose us, you’re more than just another mortgage. We take the time to understand each borrower, helping them overcome unique challenges and achieve their dreams.
With decades of experience in home loans, we can help you secure the best rates. Whether you’re interested in a bank statement loan, refinancing your existing mortgage, or purchasing through an FHA loan, we have a program for you.
Get One Step Close to a New Property With Nevada Bank Statement Loans
Are you ready to become a Nevada property owner? Pride Lending is here to guide you through the home loan process. The next step is to get pre-approved, which you can easily do using our online streamlined process.
Pride Lending makes it easy to prove your income your way. Whether you’re a small business owner or an independent contractor, our team is dedicated to helping self-employed individuals set down roots in Nevada.
If you have questions, please contact our team today at 725-231-0192. As a certified LGBT Business Enterprise, we promote an accepting, inclusive community that always puts the customer first.
