TEXAS BAD CREDIT BANK STATEMENT MORTGAGE LENDERS- Are you self-employed or 1099 wage earner and having a hard time getting pre-approved for a TEXAS mortgage because you have bad credit? We know the story. They have a great top line, but after the accountant works their magic there isn’t much adjusted gross income left to by a TEXAS home. Bad credit TEXAS bank statement Business Lenders can help!…
NO TAX RETURN BAD CREDIT TEXAS USE BANK STATEMENT FOR INCOME!
BANK STATEMENT TEXAS MORTGAGE LENDERS INCOME DOCUMENTATION
● Texas Bank Statement Mortgage Lenders – 12 or 24 months Texas business or personal bank stmts (Self Employed, Contactors, Freelancers in the same line of work for a full 2 years.
(Texas Bank Statement Mortgage Lenders qualify rental income qualified by lease agreements)
- Texas Bank Statement Mortgage Lenders—3-month Bank Statement (24-month CPA compiled and signed P&L statement supported by 3-months bank stmts)
- Texas Bank Statement Mortgage Lenders—Profit and Loss (P&L) only. 24-month P&L compiled and signed by CPA. CPA must also attest to filing tax returns for borrowers for 24-months.
- Texas Bank Statement Mortgage Lenders—VOE only.
PROPERTY TYPES – Texas BANK STATEMENT MORTGAGE LENDERS:
● SFRs, condos, townhouses, 1-4 units (no rural properties < $200,000)
● Property must show “pride of ownership”
● Minimum $25,000 equity required
CREDIT SCORE -Texas BANK STATEMENT MORTGAGE LENDERS:
LTV/CLTV Maximum Loan Amount
Min 600+ Fico Texas Bad Credit Bank Statement Mortgage Lenders
Texas Bank Statement Mortgage Lenders 90% $1,500,000 660+Credit Score
Texas Bank Statement Mortgage Lenders 80% $2,000,000 75% $2,500,000 80% $1,000,000
Texas Bank Statement Mortgage Lenders 75% $2,000,000
Texas Bank Statement Mortgage Lenders Primary Residence & Second Home – Cash Out Refinance
Texas Bank Statement Mortgage Lenders Credit Score LTV/CLTV Maximum Loan Amount 75% $1,500,000 70% $2,000,000 70% $1,500,000 65% $2,000,000
Texas Bank Statement Mortgage Lenders Non-Owner Occupied – Purchase, R/T & Cash Out Refinance – Credit Score LTV/CLTV Maximum Loan Amount 60% $1,500,000
Texas BANK STATEMENT MORTGAGE APPLICANTS MUST BE SELF-EMPLOYED TO QUALIFY FOR THIS PROGRAM.
Using Personal Texas bank statements to Qualify
Validation of minimum of 2 years existence of the business from one of the following: Business License, Letter from Tax preparer, Secretary of State Filing or
Most recent 12 or 24 months personal Texas bank statements – Utilize 12 or 24 months average deposits to qualify (minus disqualified/unrelated deposits)
Most recent 2 months business Texas bank statements – Demonstrate transfers from business to personal bank account statements provided
Borrowers must own a minimum of 25% of business to be considered Self-Employed, for use of personal Texas bank statements .
Qualifying income may not exceed the income indicated on the initial 1003.
Personal Bank Statement Analysis
Income should be calculated based on a 12 or 24 month average of total deposits minus any unusually large deposits exceeding 50% of the monthly
income (as defined by Fannie Mae) into personal accounts must be explained via LOE. If LOE is sufficient, no sourcing required.
Pattern of deposits and payment should be consistent
ATM deposits may be included if a consistent pattern of such deposits is present;
Expectations of changes in deposit pattern must be considered;
Income documented separately but comingled must be backed out of deposits;
Two months business Texas bank statements ;
o Must evidence activity to support business operations, and
o Reflect transfers to the personal account
Using Business Texas bank statements / Co-mingled (Business & Personal) to Qualify Validation of minimum of 2 years existence of the business from one of the following: Business License, Letter from Licensed Tax preparer, Secretary of
State Filing or equivalent. Borrowers utilizing business Texas bank statements that own > 50% but < 100% of a business will be qualified at the P&L net income multiplied by their ownership. Less than 50% ownership will require exception approval for use of Business Texas bank statements
Business Expense Statement Letter:
o An expense statement specifying business expenses as a percent of the gross annual sales/revenue prepared and signed by a licensed tax
o 12 or 24 months of business Texas bank statements covering the most recent time period.
o Net Income determined by total deposits per Texas bank statements less total expenses. Total expenses calculated by multiplying total deposits by the
expense factor provided by licensed tax preparer. Qualifying income is the lower of the net income from the analysis or the income indicated on
the initial 1003 2. 12 or 24 Month P&L Statement (Option 2)
o 12 or 24 Month P&L prepared by a licensed tax preparer
o 12 or 24 Months of business Texas bank statements covering the most recent time period and matching the time period of the P&L.
o P&L Sales/Revenue must be supported by the provided Texas bank statements . Total deposits per Texas bank statements , minus any inconsistent deposits,
must be no more than 10% below revenue reflected on P&L. The Texas 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
12 or 24 Month Borrower Prepared P&L Statement: (Option 3)
o 12 or 24-month P&L prepared and signed by the borrower
o 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.
o 12 or 24-months of business Texas bank statements covering the most recent time-period and matching the same period covered by the P&L
o Borrower is required to provide separate P&Ls & business narrative for each business being used in qualifying
o P&L Sales/Revenue must be supported by the provided Texas bank statements . Total deposits per Texas bank statements , minus any inconsistent deposits,must be no more than 10% below sales/revenue reflected on the P&L. The Texas 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
o The 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 to consider in this analysis;
Description of business from narrative
Location of business – Home based or lease space (Google address)
Utilities – Phone, electric, internet
Number of employees or contractors – employee taxes, payroll expense
Cost of Goods Sold – What type of materials does the business use or manufacture.
Equipment or Trucks/Vehicles owned or leased
Type of client base – retail or commercial
Any recurring payment on the Texas bank statements should be compared to an expense item on the P&L for reasonableness.
24 Month CPA Prepared P&L (Option 4) – (12 Months P&L Not Available)
o Available on LTV <=90%
o 24 (P&L) prepared/complied and signed by a CPA (proof of CPA current state license required) dated within 30-days of the loan application, and
o A minimum 2-months of business Texas bank statements covering the most recent 2-month period.
o The 2-months of business Texas 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 Texas bank statements must be greater than, or no more than, 10% below the average monthly sales. In
the event the 10% tolerance is not met, continuous Texas bank statements may be added to the analysis until the tolerance is met.
Self Employed/Wage Earner Combination – Joint borrowers with 1 wage earner and 1 self-employed business owner can verify income separately, with the
self-employed borrower utilizing Texas bank statements and the wage earner providing pay stubs/W-2s. The wage earner 4506T should include W-2 transcripts
only. Combination scenario must be qualified and priced as a bank statement loan
Component Sources of Income – A borrower who has a self-employed business and also receives income from other sources is eligible for the bank
statement program. Income sources include but are not limited to rental properties, trust & investment, alimony, etc. These income sources must be
separately documented on the 1003 and must be separately supported by bank statement deposits.
o Rental Income
A current lease is required for all REO income properties
Must provide proof of ownership
Must provide rental payments of 2 months via cancelled checks, deposits clips, or bank records
If lease is not available, market rent should be reduced by a vacancy/expense factor of 25%
o Trust Income –
Income from trusts may be used if constant payments will continue for at least the first 3 years of the mortgage term as evidenced by trust income documentation
Trust Agreement required confirming amount, distribution frequency, and duration of payments
o Alimony Income
Final Divorce decree or legal separation agreement required
Must provide payment evidence of 6 months via cancelled checks, deposit slips, or bank records
o Note Receivable Income
Copy of the note confirming amount and length of payment
Must provide payment evidence of 12 months via cancelled checks, deposit slips, or bank records
o Royalty Payment Income
Royalty contract, agreement, or statement confirming amount, frequency, and duration of the income must document a 3 year
continuance Must provide payment evidence of 12 months via cancelled checks or bank records/deposits
The underwriter should provide notes of their analysis on the U/W approval form/1008/or within the bank statement analysis.
Expenses must be reasonable for the type of business;
Pattern of deposits and payment should be consistent;
Expectations of changes in deposit pattern must be considered;
Income documented separately but co-mingled must be backed out of deposits.
CREDIT REQUIREMENTS INCLUDING TAX LIENS, JUDGMENTS-Texas BANK STATEMENT MORTGAGE LENDERS -All tax liens and judgments must be paid at closing
COLLECTION ACCOUNTS- Texas BANK STATEMENT MORTGAGE LENDERS –Collections and charge offs need to be paid off except: – Medical Collections Texas Bank Statement Mortgage Lenders –
Collection account requirements for Texas Bank Statement Mortgage Lenders older than 2 years
Adjustable Rate -Texas Bank Statement Mortgage Lenders
DOWN PAYMENT REQUIREMENTS BY Texas BANK STATEMENT MORTGAGE LENDERS- Down payment funds should be documented for 60 days per the Fannie Mae Verification of Deposits and Assets Texas Bank Statement Mortgage Lenders guidelines with the documentation included in the loan file.In addition to documenting the down payment, closing costs, and minimum PITIA reserve requirements, all Texas bank statement only mortgage applicants must disclose and verify all other liquid assets.
- Bank Account Statements should cover most recent 60-day period
- VOD should be dated within 30 days of loan application date
- Stocks/Bond/Mutual Funds -100% of stock accounts can be considered in the calculation of assets for closing and reserves;
- Vested Retirement Account funds –60% may be considered for closing and/or reserves;
- Non-vested or restricted stock accounts are not eligible for use as down payment or reserves.
- Assets being used for dividend and interest income may not be used for reserves requirements.
- When Texas Texas bank statements are used, large deposits must be evaluated. Large deposits are defined as any single deposit that represents more than 75% of the
monthly average deposit balance. Large deposits need to be sourced.
- Use of Texas business funds: may be used for down payment, closing costs and reserves if the borrower is the sole proprietor or 100% owner of the Texas business (or all
Texas bank statement only mortgage applicants combined own 100%).
o Calculation used to determine if Texas business funds are available
Average Monthly Texas business Expense: Use the most recent six (6) month Texas business Texas bank statements , total all Texas business withdrawals and divide by six(6).Two (2) Months Expenses: Take Average Monthly Texas business Expense and multiply by 2. Take the most recent Texas business account ending balance and subtract the Two (2) Months Expense. ( = ) Funds Available: The result, if positive, represents the maximum amount of Texas business funds available to use towards down payment, closing cost and reserves.
CHARGE OFF, COLLECTION ACCOUNTS- Texas BANK STATEMENT MORTGAGE LENDERS
Individual collection and non-mortgage charge-off accounts equal to or greater than $250 and accounts that total more than $2,000 must be paid in full prior to or at closing. Medical collections may remain open with a max cumulative balance of $10,000
Collections and charge-offs that have expired under the state statute of limitations on debts may be excluded. Evidence of expiration must be documented. All open judgments, garnishments, and all outstanding liens must be paid off prior to or at loan closing.
Charge-offs and collections not excluded by the above bullet points must be paid or may stay open if using one or a combination of both of the following:
o Payments for open charge-offs or collections are included in the DTI (Subject to program DTI restrictions). If no payment plan, payment calculated at
5% of the balance of remaining unpaid collections and charge-offs.
o Reserves are sufficient to cover the balance of the charge-offs or collections and meet reserve requirements.
AGE OF DOCUMENTS – Texas BANK STATEMENT MORTGAGE LENDERS
Credit Report/Credit Documentation: 90 days old at the time of closing
Income and Asset Documentation: Dated within 90 days of closing
Title Report/Title Commitment: Dated no later than 90 days prior to closing
APPRAISAL- Texas BANK STATEMENT MORTGAGE LENDERS
Full Interior / Exterior appraisal required. Fannie Mae/Freddie Mac Forms 1004/70, 1025/72, 1073/465 or 2090 must be used. All Fannie Guidelines apply to
appraisal process and value determination, in addition an Appraisal Management Company must be utilized for appraiser selection.
The Appraisal should be dated no more than 120 days prior to the Note Date. After a 120 Days period, a recertification of value is acceptable up to 180 days.
After a 180 day period, a new appraisal is required. Re-certification of value is not acceptable. Minimum Square Footage 800 Sq. Feet
Not eligible: Properties for which the appraisal indicates condition ratings of C5 or C6 or a quality rating of Q6, each as determined under the Uniform Appraisal
Dataset (UAD) guidelines. Texas bank statement mortgage lenders will consider if issue has been corrected prior to loan funding with proper documentation.
APPRAISAL REVIEW PRODUCTS: An enhanced desk review product, (such as an ARR from ProTeck or CDA from Clear Capital), from a Texas bank statement mortgage lenders Approved AMC is required on all transactions.In lieu of an enhanced desk review product, a field review or second appraisal from a Texas bank statement mortgage lenders’s AMC is acceptable. If the Appraisal Review Product value is more than 10% below the appraised value a second appraisal is required. When a second appraisal is provided, the transactions “Appraised Value” will be the lower of the two appraisals.A second appraisal is required on loan amounts > $1,500,000
COVERAGE AREAS INCLUDE