BANK STATEMENT
Property Types

A Bank Statement Mortgage Loan is a specialized lending product designed to assist individuals, particularly self-employed borrowers, who may not have traditional income documentation like W-2s or tax returns, but can demonstrate their ability to repay a mortgage through bank statements. These loans focus on a borrower’s cash flow as evidenced in their bank deposits rather than taxable income.

Here’s an in-depth look at the property types eligible for bank statement mortgage loans:

Primary Residences
A primary residence is the home where the borrower intends to live for the majority of the year. Lenders view primary residences as lower risk since people are more likely to make timely payments to protect their home. Bank statement loans for primary residences are common for self-employed individuals who may have difficulty qualifying through conventional mortgage routes due to inconsistent or complex income documentation.

Eligible property types under primary residences include:
– Single-family homes: Detached houses meant for a single household.
– Condominiums: Individually owned units within a shared building or complex.
– Townhomes: Multi-floor homes that share walls with adjacent units but have separate entrances.
– Planned Unit Developments (PUDs): Communities of single-family homes or townhomes where homeowners belong to a homeowners association (HOA).

Second Homes or Vacation Properties
A second home is a property that the borrower uses for vacation or recreation but does not reside in year-round. These homes are typically located in tourist or vacation destinations. While second homes are considered riskier than primary residences (since borrowers may prioritize their main home during financial difficulties), bank statement mortgage loans are available for these properties as well.

Eligible property types under second homes include:
– Vacation homes: Single-family homes or condos located in resort areas or near natural attractions.
– Condos in vacation destinations: Properties in areas frequented for short-term stays.
– Lake houses, beach houses, and mountain cabins: Properties used primarily for leisure or seasonal getaways.

Investment Properties
An investment property is purchased with the intent of generating income, either through rental income, property appreciation, or resale. These properties are considered higher risk by lenders because they are not owner-occupied and thus may not be a top priority for the borrower in the event of financial hardship. Despite the higher risk, many investors use bank statement loans to finance these properties due to flexible underwriting criteria.

Eligible investment property types include:
– Single-family rental homes: Houses rented out to tenants.
– Multi-family properties (2-4 units): Small apartment buildings or duplexes where the borrower rents out units.
– Condominiums for rental purposes: Condos purchased for long-term or short-term rental.
– Fix-and-flip properties: Homes bought to renovate and resell for a profit.

Non-Warrantable Condominiums
A non-warrantable condominium refers to a condo that does not meet the lending criteria set by government-sponsored enterprises like Fannie Mae or Freddie Mac. These properties may have a higher percentage of investment ownership, pending litigation, or other characteristics that make them ineligible for conventional financing. However, bank statement loans often provide an alternative financing option for buyers of non-warrantable condos.

Mixed-Use Properties
Mixed-use properties are buildings that have both residential and commercial components. For example, a property might have a storefront on the ground floor and residential units above. While mixed-use properties are sometimes harder to finance with conventional loans, bank statement loans can offer a solution for borrowers whose income comes from both personal and business operations.

Key Advantages of Bank Statement Loans for Different Property Types:
– Flexible qualification requirements: Borrowers are evaluated based on bank statement cash flow rather than tax returns, making it easier for self-employed individuals to qualify.
– Ability to finance non-conventional properties: Bank statement loans open up opportunities to purchase properties like non-warrantable condos and mixed-use buildings.
– Higher loan limits: Lenders offering bank statement mortgages are often more lenient on loan amounts, allowing borrowers to finance luxury homes or large investment properties.

Bank statement mortgage loans provide self-employed individuals and other non-traditional income earners the opportunity to finance a wide range of property types. From primary residences to investment properties, these loans offer flexibility in both eligibility and documentation requirements, making them an appealing option for borrowers who may not fit into the standard mortgage mold. The key to securing a bank statement mortgage loan lies in demonstrating consistent cash flow through bank deposits, which can provide lenders the confidence needed to approve financing for various property types.