Bank Statement Loans in North Carolina and South Carolina

Self-employed borrowers qualify for conventional loans every day. Conventional underwriting starts with your tax returns but can add back certain non-cash expenses like depreciation, and Fannie Mae allows one year of returns in some situations. If your returns support the loan you need, conventional usually costs less. A bank statement loan makes sense when your cash flow is strong but your qualifying tax-return income is too low. See can self-employed borrowers get a mortgage.

The lender reviews your statements, removes deposits that aren't income (transfers between your own accounts, loan proceeds, refunds and one-time deposits), applies any required expense calculation, and averages the result over 12 or 24 months. That average becomes your qualifying monthly income.

Personal statement programs look at business income deposited into your personal account, usually without an expense factor, because those deposits are already your pay. Business statement programs look at your business account, then subtract an expense factor because revenue isn't profit. Which one works better depends on how money flows through your accounts.

Lenders handle business expenses differently. Some use a fixed percentage, some use an expense ratio based on your type of business, and some accept a profit-and-loss statement or a letter from your CPA or tax preparer. A consultant with low overhead and a contractor with payroll and equipment shouldn't be treated the same way, and the lender's method can change your qualifying income a lot. That's one of the biggest reasons I compare multiple lenders.

A 12-month program can help if your deposits have been growing, since older, lower months aren't averaged in. A 24-month program can help if you had one slow stretch recently. Pricing and eligibility can differ between the two, so I run both when they're available.

Large or irregular deposits may need an explanation or documentation before they count. Underwriters also look for declining deposits, overdrafts and non-sufficient-funds activity. One unusual month doesn't sink a loan, but a pattern may need a closer look.

There isn't one set requirement. Down payment, credit and reserves depend on the lender, your credit, loan amount, property type, occupancy and whether you use personal or business statements. Don't assume a specific down payment or reserve amount until the actual program is chosen.

Bank statement loans usually carry higher rates or fees than conventional loans. Compare the full picture: rate, APR, points, lender fees, cash to close, reserves, and how each lender calculates your income. Fixed, adjustable and interest-only options may be available. Federal rules generally don't allow prepayment penalties on non-QM loans for a home you'll live in, while investment-property loans made for business purposes can include them. Always ask before you close.

Non-QM doesn't mean no documentation. Lenders still have to make a good-faith determination that you can repay, and they review your income, assets, credit, debts, the property and your reserves. A bank statement program simply documents income a different way. See Non-QM home loans.

Usually: 12 or 24 months of complete bank statements (all pages), proof you've been self-employed (business license, CPA letter or other verification), business ownership documents, ID, and asset statements for your down payment, closing costs and reserves. Some programs also need a profit-and-loss statement or explanations for certain deposits. See what documents you need for a mortgage.

Possibly. Some borrowers buy with a bank statement loan and later refinance into conventional financing once their tax returns support it. But future rates, values, income and guidelines aren't guaranteed, so choose a loan that works on its own today. See can mortgages be paid off early.

Bank statement lenders differ in expense factors, which deposits count, minimum credit, self-employment history, reserves and pricing. A file that doesn't work with one lender can calculate very differently with another. As a broker, I compare the options available through my lenders using your actual statements.