It’s a great time to buy a home. But, that doesn’t mean that it’s easy. In fact, qualifying for a home loan can be difficult, especially if you’re self-employed. After all, you’re likely taking all the possible deductions you an, which is lowering your net income. Although there are tax advantages, the problem is that with a lower net income you’re unlikely to meet the traditional criteria for a mortgage. A bank statement, or a stated income loan in Los Angeles, caters to the self-employed in a way conventional mortgages can’t.
What Is a Stated Income Loan?
In the past, before the mortgage companies could qualify people by asking how much money they made. The borrower would state their income without documented proof. Unfortunately, this is one of the things that led to the 2008 housing market crash. The 2010 Frank-Dodd Act changed the way borrowers qualify for these types of loans, requiring proof the borrower can repay it.
Who, In Los Angeles, Can Qualify for a Stated Income Loan?
Frank-Dodd made it illegal for stated income loans to be made for individuals financing an owner occupied home without the proper documentation. To qualify for this type of loan, you’ll need to meet the following:
- Like a traditional mortgage, you need a good credit score to qualify.
- You must have been self-employed for a minimum of two years before applying.
- You’ll need to provide a VOE (verification of employment) claiming you’re self-employed.
- You need to provide 12 to 24 months of bank statements.
- You’ll need to have at least 10% of the purchase price as a down payment.
Bank Statement Loan Benefits
Despite the fact that stated income loans contributed to the housing crash in 2008, they’re not inherently bad. In fact, this type of loan can be very beneficial to certain borrowers. Some of these benefits include:
- Self-employed borrowers are more likely to qualify.
- Tax returns aren’t the main income verification source.
- Low down payment options are available for stated income borrowers.
- Rates for stated income mortgages are generally only slightly higher.
Get a Mortgage Loan Quote Today
If you’re ready to take the next steps towards homeownership, don’t let being self-employed hold you back. Our team of caring mortgage professionals will be happy to assist you in finding the perfect loan for you and your circumstances. Contact us today for a free, no obligation quote to make your dreams of buying a home come true .