Bank Statement Loans for Business Owners: Seek Assistance from a Mortgage Lender
Miami is a hub for business owners, entrepreneurs, and self-employed professionals. Several real estate investors and startup owners are abundant in this city in Florida. However, not all of them fare well when getting a mortgage. Many business owners lack the W-2 income preferred by lenders. That is where bank statement loans come into the picture.
Self-employed people, including business owners, often opt for bank statement loans, especially those with a strong cash flow. Top mortgage lenders offering these loans do not check for additional documents but focus on the applicant’s bank statements. Such loans are ideal for Miami business owners who reinvest in their ventures and take tax deductions.
The basics of a bank statement loan
A bank statement loan allows self-employed individuals, including business owners, to get a loan without having tax returns. Their bank deposit records are analyzed to assess their loan eligibility.
When you apply for this loan, the lender reviews bank statements for 12-24 months. Based on the analysis, they calculate your approximate monthly income. This analysis provides full cash flow, which improves your loan approval prospects.
Why do bank statement loans suit business owners in Miami?
There are several reasons why business owners opt for this loan:
- Miami has a considerable self-employed workforce, which comprises small business owners, entrepreneurs, Real estate investors, gig workers, and freelancers. These individuals often find it challenging to qualify for a regular mortgage. A bank statement loan is a more flexible and feasible alternative for them.
- Most business owners opt for tax deductions to reduce their taxable income. It helps in taxation but also makes qualifying for a mortgage more challenging! Bank statement loans omit the tax return and focus on actual cash flow.
- The real estate market in Miami is becoming more competitive, and property prices are soaring. Bank statement loans usually offer higher loan limits than traditional or FHA loans. This can be useful for entrepreneurs or business owners seeking luxury condos or lavish waterfront properties.
- Bank statement loans are ideal for Miami business owners who are investing in real estate for rent-based income. Traditional lenders may not readily accept such income, but those offering bank statement loans allow rental income as a qualifying source of income.
Things to keep in mind
To get approval for a bank statement loan, you have to be self-employed for at least 2 years. Most lenders ask for bank statements for the last 2 years. The credit score should preferably be above 620, though this is negotiable. Also, you may have to make a decent down payment worth 10% or more of the property value.
So, you may not be a good candidate for this loan if your business is very new or if you have been freelancing for less than a year. Also, the interest rates may be slightly higher than those of other mortgage types.
Final comments
A bank statement loan is suitable for business owners and freelancers, but also has limitations. You should consider your financial situation carefully and compare several lenders to find the best one. If you are unsure about the right lender, use an online directory to find them and assess them quickly.
