Self-employed workers have a more difficult time qualifying for a mortgage. Conventional lenders use taxable income on returns to determine if a borrower should qualify for a loan. However, gig workers and business owners report less taxable income than they earn. Write-offs and other strategies help self-employed workers minimize taxes. While these strategies save money, they make your loan application less appealing to a conventional lender. Angel Oak’s bank statement loan addresses this issue. This financing option provides a more straightforward path to receiving funds to purchase a property.
Financing for Self-Employed Workers
About Angel Oak
Angel Oak Home Loans provides innovative financing products to help consumers access funds for a mortgage. The full-service lender has provided loans to borrowers since 2010. Angel Oak provides more flexibility than Fannie Mae and Freddie Mac loans. Some borrowers get accepted for an Angel Oak loan even if they get denied a conventional loan.
The mortgage lender offers traditional and non-traditional (non-QM) mortgages. Their website has an interactive map that shows where you can find one of their 200+ loan officers. The company employs 900 people in total. Angel Oak has these loan officers spread across 39 states where the company received licenses to operate (M.D., LA, MS, AL, and others). The mortgage provider has lent over $21 billion in mortgage loans and has $26 billion in assets under management. Angel Oak was recently recognized as one of the fastest-growing private companies in Atlanta.
What Is A Bank Statement Loan?
A bank statement loan lets consumers qualify for a mortgage through their bank statements. Eligible self-employed borrowers can use this loan to purchase or refinance a home.
How Does A Bank Statement Loan Work?
A lender reviews your personal or business bank statements for the past 1-2 years. The lender will use these statements to calculate your income for qualification purposes. Bank statement loans work well for self-employed workers who use tax strategies to reduce their taxable income. Conventional lenders will look at the reduced taxable income and possibly reject your application or assign a higher interest rate. Bank statements help prevent that scenario from happening to gig workers and business owners.
Benefits of Bank Statement Loans
- Use bank statements instead of tax returns: Some tax returns show losses even when the business owner made a profit. Business owners can offset gains to save money, but they get hurt when applying for a conventional loan. Bank statements give lenders a more accurate perspective of your income. Self-employed borrowers may get approved and get lower interest rates on these loans.
- Continue using write-offs without fear: You won’t have to worry about how writing off some of your taxes can affect your mortgage application. You deserve to save on taxes without getting penalized by mortgage brokers. A bank statement loan fixes this problem.
- Some lenders let you make low down payments: You might qualify for a 10% down payment on the loan depending on your credit score, income, and other factors.
Bank Statement Loan vs. Traditional Mortgage Loan
A bank statement loan focuses on your bank account statements (personal or business). A traditional mortgage loan lender uses your tax forms, W-2s, and paycheck stubs to decide on your loan application. Traditional loans hurt self-employed consumers since these consumers have more flexibility with tax write-offs. A lower taxable income makes them less appealing to lenders. This viewpoint can lead to a rejection or unfavorable loan terms.
Some bank statement loan providers don’t tack PMI onto the loan. It’s possible to make a 10% down payment toward a bank statement loan without incurring the additional insurance premiums. Borrowers must pay PMI on conventional loans if the down payment doesn’t exceed 20%. You can get rid of PMI once you build up 20% equity in your home. However, if you use an FHA loan to finance your home, it can take at least 11 years to remove the PMI costs. Some FHA financing requires PMI expenses for the loan’s lifetime.
Financing for Self-Employed Workers
Is A Bank Statement Loan Right For You?
A bank statement loan is optimal for self-employed workers who capitalize on several tax deductions. Higher earnings help consumers qualify for better loans. However, a bank statement loan isn’t the best choice for everyone. Self-employed borrowers with several overdraft payments should consider another loan product. Lenders won’t like to see these fees in your history. A bank account with a positive balance for several months is more appealing to a lender. The positive balance indicates the borrower can reliably pay back the loan.
Lenders will also check for regular deposits. Making consistent deposits tells the lender that you generate steady income. Frequent deposits will make a borrower seem less risky to a lender. However, if you haven’t deposited money into your account for several months, the lender may become concerned. A bank statement loan is one way to qualify for financing. Self-employed borrowers should consider several financing products before opting for a bank statement loan.
Requirements to Get A Bank Statement Loan with Angel Oak
- At least a 10% down payment
- Two years seasoning for foreclosure, short sale, bankruptcy, and deed-in-lieu
- Owned-occupied homes, second homes, or non-owner occupied properties
How To Inquire About an Angel Oak Bank Statement Loan
Angel Oak offers financing solutions to millions of clients. You can inquire about their bank statement loan option by filling out the form. After providing your details, one of Angel Oak’s licensed mortgage originators will contact you within one business day. An originator will provide you with additional information about how to qualify and inform you about necessary documents. Angel Oak home loans may require additional documents for eligibility.
You can learn more about Angel Oak’s Bank Statement Loan and their other home loan financing options through their website.
Other Options From Angel Oak
Angel Oak has numerous financial products for self-employed and employed individuals. Their flexibility helps more people obtain funds.
- 1099 Income Loan: Borrowers can use 1099 forms instead of tax forms to qualify for a loan. This financing option helps self-employed borrowers get funds.
- Investor Cash Flow Loan: Angel Oak doesn’t check your personal income. The mortgage lender will assess a property’s cash flow when giving out proceeds.
- Jumbo Loan: This loan helps borrowers obtain financing for expensive properties that exceed the limits of conventional loans.
- Asset Qualifier Home Loan: Consumers can use checking, savings, retirement, and brokerage portfolio accounts to qualify for a loan. You can also use other assets, and Angel Oak will not check your income or tax returns.
- ITIN Mortgage Loan: A financing option for borrowers without a social security number. This loan provides flexibility with the debt-to-income ratio (up to 50% DTI).
- Foreign National Program: Borrowers outside the U.S. can use this program to receive a loan. Angel Oak will assess a property’s cash flow instead of the borrower’s income.
- Traditional Home Loans: Angel Oak also offers conventional FHA, USDA, and V.A. loans.