Non- QM Loans: 24 Months Personal Bank Statements Loan

What Is a 24 Month Personal Bank Statement Loan?

Under a 24 Month Personal Bank Statement loan, you submit your last 24 monthly bank statements to the lender. From there, the lender will average out your income over the two years to determine your qualifications for a loan. You still need to be able to qualify for the loan under the income that you show, but you don’t have to show your tax returns, W2s, or paychecks. 

All this means that you’re able to purchase a property without necessarily having to produce a lot of income-related documentation. 

Why Would You Need a 24 Month Bank Statement Loan?

Self-employed people usually don’t have regular paychecks. If someone self-employed has a good three months at the beginning of the year but then doesn’t work for the rest of the year, it can look as though they have no income. Individuals with non-traditional employment aren’t going to be able to show that they have regular paychecks.

Further, with a bank statement loan, the mortgage isn’t tied to tax returns. When a mortgage is tied to tax returns, people who own their own businesses often have limited buying power, because they often have a lot of deductions that they voluntarily take to reduce their tax burden.

Some people may want a stated income loan because they are currently between jobs. Someone who has recently lost their job may have difficulty qualifying for a loan even if they are confident that their earning potential remains unchanged. Immigrants are another class of individuals who may have earning potential but may not have fully documented earnings.

How Can You Get a 24 Month Loan?

You can get a 24 Month Bank Statement loan by going through a non-QM mortgage lender. The loan will be similar to a QM loan, under which an individual will need to submit their credit score and other documents. Often a QM loan will ask to see your cash reserves because they will need to know that you can pay back the loan regardless of your income picture. From there, you will negotiate the terms of the loan.

Non-QM loans tend to be more varied than traditional loans, which means you may see a broader spread in terms and interest rates. However, some low-interest lenders specialize in non-QM loans and bank statement loans. It can be more challenging to qualify for these loans, especially in terms of credit score, but many borrowers may find that it’s the only option for them due to their non-traditional earnings

For the bank statement loans, you will need to furnish your bank statements for your income to be properly estimated. 

What Are the Alternatives to a 24 Month Statement Loan?

In addition to 24 Month Statement loans, there are also loans for 12 months. If someone wants to be qualified solely based on their current earnings, it can help. This can happen if an entrepreneur or an individual has recently increased their earnings.

There are also stated income loans, for investors. A stated income loan asks you how much you earn and takes this income to qualify you. To get a stated income loan you usually need to have fairly good credit and solid cash reserves. Stated income loans are not allowed for those who are investing in an owner-occupied property. An owner-occupied property loan needs to be lower risk to protect both the bank and the borrower.

24 Month Personal Bank Statement loans are only one of the types of non-QM loan. There are many types of flexible loans for both individuals and businesses. By going through a non-QM lender, it’s possible to get a loan even with low or no credit, or without any documented income.