A Guide to Bank Statements for Your Mortgage
Lenders evaluate various factors during the mortgage application process, including property type, credit score, and financial documents like bank statements.
What Is a Bank Statement?
Bank statements summarize your account balance and banking activity, including deposits and withdrawals, on a monthly or quarterly basis.
Why Do Mortgage Lenders Require Bank Statements?
Verify Income: To ensure you can make mortgage payments.
Reserve Funds: To confirm you have enough funds for several months of payments.
Closing Costs: To check if you can cover closing costs.
Sourced and Seasoned Funds: To verify the origin and stability of your funds.
What Do Underwriters Look For?
Stable Income: Regular sources like paychecks or royalties.
Savings Balance: Sufficient funds to cover payments in case of setbacks.
Large Cash Deposits: Documentation for any sudden large deposits.
Overdrafts: Frequent overdrafts are a red flag.
How Many Bank Statements Will You Need?
Typically, lenders require at least two months of bank statements to ensure no recent loans have been taken out to qualify for the mortgage.
Providing Bank Statements When Self-Employed
Self-employed borrowers may need to provide bank statements over a longer period to verify cash flow and separate business from personal accounts.
Bank Statement Loans for the Self-Employed
Self-employed individuals can opt for bank statement mortgage loans, which require only bank statements to verify income instead of tax returns or pay stubs.
Frequently Asked Questions
How do I find my bank statements?
Access them through your bank’s website or request a paper copy.
What do mortgage lenders use bank statements for?
To verify income, cash reserves, and the origin of your money.
How far back do mortgage lenders look at bank statements?
Usually, 2 to 3 months of statements are reviewed.
Can I qualify for a mortgage with bank statements only?
Yes, especially if you’re self-employed.
What other documentation will I need?
Pay stubs, W-2s, tax returns, personal identification, social security card, investment account statements, and a list of monthly debts.
The Bottom Line
Bank statements are crucial for lenders to evaluate your reliability and verify your income sources.
Ready to start your journey to homeownership? Begin your mortgage application now!
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