24 Months California Business Bank Statement Mortgage Lenders

24 Months – Business Bank Statement California Mortgage Lenders

Self-Employed Business Bank Statement Mortgage Lenders are considered Non-QM.

The self-employed 24 Months business California Bank Statement Mortgage Lenders program is available to self-employed borrowers only and allows the use of 24 months of California Bank Statement Mortgage Lenders to document self-employment income. Income documented through the Self Employed Bank
Statement method Maybe combined with other income sources that are documented as Full Doc but not associated with self-employment, such as a spouse employed as a wage earner. When wage income is combined with Self-Employed 24 Months California Bank Statement Mortgage Lenders, a tax return is not required for the full income documentation, as this would invalidate the California Bank Statement Mortgage Lenders. The 4506T is still required, however, box 8 should be checked to obtain a transcript of W-2 earnings.

SELF EMPLOYED BUSINESS BANK STATEMENT INCOME CALCULATION

  • 12 or 24 Month borrower prepared P&L statement: (all loans under $3 Million would require the following)
  • P&L prepared and signed by the borrower; and
  • A business narrative provided by the borrower which includes detail regarding the size and operating profile of the business addressing; location/rent, number of employees/contractors, COGS, Trucks/Equipment (Owned or leased). The expenses listed on the P&L should address all items disclosed in the narrative.
  • 24-months of business bank statements covering the most recent time-period and matching the same period covered by the P&L;

 The underwriter analysis of the business and P&L will require a basic understanding of the borrowers business. The narrative provided by the borrower should be reviewed to determine if the business provides a service or produces/manufactures goods. If the business has a web site, it should be reviewed to gain additional information on the business and its size. The goal of the analysis is to determine if the individual/total expenses as provided by the borrower on the P&L appear reasonable for the type of business. The items that may be considered in this analysis;

o Description of business from the narrative

o Location of business – Home based or lease space (Google

address)

o Utilities – Phone, electric, internet

o Number of employees or contractors – employee taxes, payroll

expense

o Cost of Goods Sold – What type of materials does the business use or manufacture.

o Equipment or Trucks/Vehicles owned or leased

o Type of client base – retail or commercial

  • The underwriter should provide notes of their analysis on the U/W approval

form/1008/or within the bank statement calculator.

o Expenses must be reasonable for the type of business;

o The pattern of business bank statement deposits and payment should be consistent;

o Expectations of changes in bank statement deposit pattern must be considered;

o Income documented separately but co-mingled must be backed out of deposits.

RESTRICTIONS 24 Months – Business Bank Statement Mortgage Lenders
Contact us for acceptable credit grades, max LTV and DTI;
Non-occupant co-borrowers not allowed;
Minimum 600 credit score;
Primary Borrower must be Minimum 2 years Self-Employed or Contractor, Sole Proprietor.

12 – 24 MONTHS BANK STATEMENT MORTGAGE LENDERS
Personal Accounts Account reflecting personal income and expenses.
Verify the existence of the business, within 60-days of the note date, to ensure the
business is active with the following; a letter from either the businesses tax
professional certifying 2 years of self-employment in same business, or regulatory
agency or licensing Bureau; Must Also Verify that the borrower owns a minimum of 25% of the business; Most recent 12 or 24 months of Personal California Bank Statement Mortgage Lenders; Most recent 2 months of business California Bank Statement Mortgage Lenders. Business Accounts Mortgage Lenders Account in the name of the business reflecting only business income and expenses.
Verify the existence of the self-employed mortgage applicants business, within 60-days of the note date, to ensure the business is active with the following; a letter from either the businesses tax professional certifying 2 years of self-employed mortgage applicants in the same business, or regulatory agency or licensing Bureau;
Verify that the self-employed mortgage applicants is 100% owner of the business (Split ownership between a husband and wife permitted as long as both are on the note. If not on the note, 50% of the income may be used);
12 and 24 Month Income/Expense Documentation Options:
o 12 or 24 Month CPA compiled P&L Statement
(P&L) prepared/compiled and signed by a CPA (Proof of CPA current state license required) matching the time-period covered by the California Bank Statement Mortgage Lenders, and A minimum 3-months of business California Bank Statement Mortgage Lenders covering the most COGS, Trucks/Equipment (Owned or leased). The expenses listed
on the P&L should address all items disclosed in the narrative.
24-months of business California Bank Statement Mortgage Lenders covering the most recent
time-period and matching the same period covered by the P&L; and recent 3-month period.
o Business Expense Statement Letter: (all loans over $3 Million require the following in addition to other standard documentation)
An expense statement specifying business expenses as a percent of the gross annual sales/revenue prepared and signed by either a CPA or tax preparer; and 12 or 24-months of business California Bank Statement Mortgage Lenders covering the most recent time period and matching the time period covered by the P&L.
o 12 or 24 Month P&L Statement ((all loans over $3 Million require the
following in addition to other standard documentation)
o P&L compiled by either a CPA/accountant or licensed tax preparer
; and 12 or 24-months of business California Bank Statement Mortgage Lenders covering the most recent time-period and matching the time-period covered by the P&L.
o 12 or 24 Month borrower prepared P&L statement: (all loans under $3 Million require the following)
P&L prepared and signed by the borrower, and A business narrative provided by the borrower which includes detail regarding the size and operating profile of the business addressing; location/rent, number of employees/contractors,

SELF-EMPLOYED 12 AND 24 MONTHS BANK STATEMENTS MORTGAGE OPTIONS 
In addition to the factors described in the Income Analysis section of this guide, bank statement mortgage lenders should consider the following:
 Personal Bank statement income review:
o bank statement Income should be calculated based on a 24 month average of total deposits minus any
inconsistent deposits not justified. Qualifying bank statement mortgage lenders income may not exceed the income indicated on the initial 1003 bank statement only loan application.
o Pattern of deposits and payment should be consistent;
o ATM deposits may be included if a consistent pattern of such deposits is present;
o Expectations of changes in deposit pattern must be considered;
o Income documented separately but comingled must be backed out of deposits;
o Two months business bank statements;
 Must evidence activity to support business operations, and
 Reflect transfers to the personal account

 12 or 24 Month CPA compiled P&L Statement
 The 3-months of business bank statements must support the sales reflected
on the 24-month CPA (Proof of current state licensing required) prepared
P&L (The average deposits from the bank statements must be within 10% of
the average monthly sales). In the event the 10% tolerance is not met,
continuous bank statements may be added to the analysis until the tolerance
is met. The qualifying income is the lower of the net income from the P&L
divided by 24 or the income disclosed on the initial 1003

 12 or 24 Month P&L Statement
 P&L Sales/Revenue must be supported by the provided bank statements.
Total deposits per bank statements, minus any inconsistent deposits, must be
no more than 10% below revenue reflected on P&L. The bank statements
and P&L must cover the same time period. Qualifying income is the lower of
the Net Income indicated on the P&L or the income indicate d on the initial
1003
 Business Expense Statement Letter
 Net Income determined by total deposits per bank statements less total
expenses. Total expenses calculated by multiplying total deposits by the
expense factor provided by CPA or tax preparer. Qualifying income is the
lower of the net income from the analysis or the income indicated on the
initial 1003;

 12 or 24 Month Borrower Prepared P&L Statement
 P&L Sales/Revenue must be supported by the provided bank statements.
Total deposits per bank statements, minus any inconsistent deposits, must be
no more than 10% below sales/revenue reflected on the P&L. The bank
statements and P&L must cover the same time periods. Qualifying income is
the lower of the Net Income indicated on the P&L or the income indicated on
the initial 1003
 The underwriter analysis of the business and P&L will require a basic
understanding of the borrowers business. The narrative provided by the
borrower should be reviewed to determine if the business provides a service
or produces/manufactures goods. If the business has a web site, it should
be reviewed to gain additional information on the business and its size. The
goal of the analysis is to determine if the individual/total expenses as
provided by the borrower on the P&L appear reasonable for the type of
business. The items that may be considered in this analysis;
o Description of business from narrative
o Location of business – Home based or lease space (Google
address)
o Utilities – Phone, electric, internet
o Number of employees or contractors – employee taxes, payroll
expense
o Cost of Goods Sold – What type of materials does the business
use or manufacture.
o Equipment or Trucks/Vehicles owned or leased
o Type of client base – retail or commercial
 The underwriter should provide notes of their analysis on the U/W approval
form/1008/or within the bank statement calculator.
o Expenses must be reasonable for the type of business;
o Pattern of deposits and payment should be consistent;
o Expectations of changes in deposit pattern must be considered;
o Income documented separately but co-mingled must be backed out of deposits.

 Non-sufficient funds (NSF) or negative balances reflected on the bank statement must be
considered. Overdraft protection (Fees) associated with a pre-arranged link to a savings account or
line of credit must also be considered unless one of the following conditions exist…
o Overdraft protection from a depository account: Occurrences may be excluded if statements
for the linked account confirm that (a) the linked account balance at the time of the transfer
exceeded the amount of the overdraft transfer, (b) the linked account’s balance did not report
as zero or negative at any point during the statement period of the transfer, and (c) the linked
the account did not itself receive overdraft protection proceeds during the statement period of the
transfer.
o Overdraft protection from a line of credit: Occurrences may be excluded if statements for the
linked account confirm that (a) the line’s credit limit was not exceeded during the statement
period of the transfer and (b) a payment amount which equals or exceeds the sum of all
overdraft protection occurrences analyzed in the statement period is made within 30 days
after the statement close date.

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