Bank statement loans are available to self-employed people who choose to buy a new home. They no longer need to use tax returns with this option. They should, however, give evidence of income to the lender.
Bank Statement Home Loans in Houston is only available to anyone who can demonstrate their ability to repay their debts. The most common types of people who apply for this form of loan are freelancers, entrepreneurs, and small business owners. Borrowers, like all types of loans, must meet such criteria to be accepted. If you want to apply for a bank statement loan, you should be aware of the following requirements:
1. Credit score
Depending on the lender, a credit score as low as 500 could be sufficient. Others need a credit score of 620 or higher to be eligible for bank statement loans.
It is your duty as a creditor to obtain a decent credit score, regardless of whether the financial institution needs a higher or lower credit score. However, keep in mind that the higher your credit score, the more likely you will be eligible for a loan.
2. Income Proof
This should be the first thing you look for. Clients can choose from a variety of bank statement mortgage lending plans offered by financial institutions:
- Bank Statements for the Previous 24 Months – You have to submit the bank statements for the previous 12 months.
- If you have any other proof of consistent income, you can also submit it to your lender.
Some institutions also have a 1-month bank statement, which only requires you to file your most current bank statement for the previous month. It also depends from one lender to the lender how much proof he needs before approving the loan. The loan amount also plays an essential factor.
3. Down Payment
Finding out how much you’ll need to save for a down payment is a crucial step in the home-buying process. This can also be determined by the lender as well as the credit score. However, down payments usually vary from 10% to 30%.
When applying for bank statement loans, you’ll also be given a questionnaire to fill out. You’ll still need to procure the following essentials:
- Social security card number.
- Valid identity cards or a valid driver’s license are required.
- If you have any assets, such as a retirement account or investments, you can get home insurance.
- Your insurance account or savings would be among your assets.
- A copy of your business permit or license may be required for those who own companies.
If you’ve been accepted for the loan, the financial company will give you the rest of the paperwork you’ll need to complete the transaction.
The home-buying process happens quickly, and you can’t hurry through. Buying a home is a significant financial investment in your life. You could miss out on crucial details if you jump into it. So, take your time and get ready for Houston bank statement home loans.