A bank statement loan is a type of mortgage or personal loan that allows borrowers to qualify using bank statements instead of pay stubs or tax returns. Lenders use the bank statements to evaluate a borrower's income over a period of 12 to 24 months.
This can be helpful for people who have multiple income sources, such as self-employed individuals, freelancers, or business owners. For example, if a business owner has an unpredictable income, lenders can use their bank statements to determine how much they can afford to pay each month on a mortgage.
Bank statement loans are a type of non-qualified mortgage (non-QM) loan, which may make it easier for self-employed borrowers to buy a home. However, interest rates for bank statement loans may be higher than other options, so borrowers may want to try qualifying with tax returns first if possible.
Not all mortgage lenders offer bank statement loans, so borrowers may need to work with a mortgage broker to find one.
For seniors with reduced income this can be a good option if purchasing a home or getting a cash out refinance.