Chicago Bank Statement Mortgages: Self-Employed Borrower Solutions

Who Are Chicago Bank Statement Mortgages For?

Qualifying for Chicago bank statement mortgages is an option available only to people whose income is not from wages and only for investment properties.

These mortgages are a good option when the income on business taxes is not a good reflection of how well a business (freelancer, contractor) is doing at the time of application.

Lenders typically require the borrower to provide a profit and loss statement together with a balance sheet. These can be prepared by either the borrower or the borrower’s accountant or tax preparer.

 

Bonus Advantage of Chicago Bank Statement Mortgages

Unlike other non-qualified mortgages (non-QM), the LTV of bank statement mortgages can be as high as 90%.

 

Chicago Bank Statement Mortgage Requirements

 

1. 1. Typically, borrowers must have been earning non-wage income for 2 years
   2. They must meet credit requirements (varies by lender; generally, credit score of 640 or higher, no recent bankruptcies, foreclosures, deeds-in-lieu, mortgage lates)
   3. Low number of NSF’s (varies by lender); NFS means bounced checks, insufficient funds
   4. 100% gift funds allowed (by some lenders)
   5. Business or personal bank statements
   6. Some lenders allow only one account
   7. Maximum LTV’s vary based on what the economy as a whole is doing (80-90%) and type of loan (investment, second home, or owner-occupied)
   8. Some lenders only do detaches single family homes, townhouses and condos. Speaking of condos, some allow non-warrantable condos.
   9. Loan limits vary by lender, some stop at $2,000,000, some at $4,000,000.
   10. Typically, the maximum LTV is 50%.

You may have noticed a lot of qualifiers. That is because these are (Fannie Mae, Freddie Mac or a Government agencies don’t get involved). That means each lender creates a program based entirely on their wants and needs.

 

Types of Chicago Bank Statement Mortgages

There are three types of bank statement mortgages, those that require borrowers to provide 24 months of bank statements; those that require 12 months of bank statements and those that require two or three months of bank statements.

There are few lenders that do two or three months bank statement mortgages. Most do 12 or 24 months bank statement. The main difference is the interest rate: all other things being equal, the more bank statements they see, the less riskier a borrower looks.

 

12-Month Bank Statements Mortgage Program

Most people seem to want a 12-month bank statement mortgage. If your past 12 months are better than the previous 12 months, it makes sense. Because lenders average all the months. But if the difference is not that high, it might not be a good idea. When you show you qualify based on 12 months, lenders perceive you as riskier than if you do it based on 24 months. That riskier perception translates into higher interest rates.

 

2 or 3-Month Bank Statement Loans

Every now and again, a lender will offer a program that requires only two or three statements to determine whether a borrower has enough income. The interest rates for these programs are higher than those for 12-month bank statement programs. Usually, these programs are offered when the market is doing great.  When interest rates are going up or inflation is too high or something else bad is in the news, they are not.  If you think you might benefit from such a program, contact me.

 

Home Loans With Bank Statements As Income

Qualifying for a Chicago home loan with bank statements is simple, but not as simple as people think. Lenders do add up your deposits. But your deposits are not all considered income. Lenders exclude certain deposits: refunds, transfers from another account you own, and unusual deposits. And it makes sense. They are looking to establish your typical and, therefore, likely-to-continue income from whatever activity you earn your money with.

To get started with Chicago bank statement mortgages you need to provide your loan originator copies of

 

• • ID,
  • bank statements,
  • mortgage statements for every property you own in your own name,
  • property insurance declaration pages for all the properties you own that are mortgaged.

If you want to close the loan in the name of an LLC or a corporation, you’ll also need to provide:

 

• • articles of incorporation,
  • operating agreement or by-laws,
  • corporate resolution that shows that your company authorizes you to obtain the mortgage loan you’re trying to obtain,
  • and, if the operating agreement or by-laws do not specify, a corporate resolution or a certificate that shows who owns what percentage of the company.

And yes, your company has to be in good standing.