One of the most effective solutions available today is the Bank Statement First Lien HELOC, specifically for business owners and self-employed professionals.
Scenario: Self-Employed Borrower With High DTI
A borrower approached us with significant home equity but limited conventional financing options. The borrower owned a primary single-family residence free and clear and operated a successful HVAC business for the past seven years. As a 100% owner of the business, their tax returns reflected substantial write-offs, resulting in a calculated debt-to-income ratio of 58%. The borrower’s goal was to secure a $250,000 home equity line of credit at 80% loan-to-value to purchase inventory and maintain ongoing access to working capital.
The Non-QM Solution: Bank Statement HELOC
Instead of relying on tax returns, we utilized a 12-month bank statement program to more accurately assess the borrower’s income. As a result, the borrower was approved for a $275,000 home equity line of credit, exceeding the original request. By using bank statements, we were able to establish qualifying income that brought the debt-to-income ratio within the acceptable 50% threshold.
Bank Statement HELOCs
Self-employed borrowers often face challenges because their income is reduced on paper through legitimate tax deductions. Conventional loan programs rely heavily on tax returns, which can significantly understate true earnings. Bank statement programs address this issue by evaluating actual deposits and cash flow, offering a more realistic picture of a borrower’s financial strength.
Program Highlights
- No in-person appraisal required, allowing for a more streamlined process
- Qualification based on 12 months of bank statements
- Variable rate structure
- Five-year interest-only period
- Five-year draw period
- Thirty-year maturity
- No ownership seasoning required for primary residences
- Minimum FICO of 660 for primary homes
- Minimum FICO of 700 for second homes and investment properties
- Available in both first and second lien positions
We specialize in bank statement mortgage loans. Contact our office to see if you qualify for a bank statement program.
