Bank statement loans: An easy solution for international property investors
July 25, 2023 • 5 min read
As an international investor looking to purchase investment property in the US, financing can seem challenging when you are self-employed or an entrepreneur without traditional W-2 income. However, there is an ideal loan program that allows you to qualify based on your bank statement deposits rather than tax returns - the bank statement loan.
What is a bank statement loan?
A bank statement loan allows borrowers to qualify for a mortgage based on the deposits into their bank account rather than their income reported on tax returns. Instead of reviewing your tax returns, the lender will evaluate 12-24 months of personal or business bank statements to calculate your qualifying income.
To determine your qualifying income, the lender will:
Add up all deposits from your bank statements (personal or business accounts)
Exclude any transfers between accounts
Apply an expense ratio, usually around 50%, to account for business expenses
Divide this net deposit amount by 12 or 24 months
This provides your lender with a monthly qualifying income figure to base your borrowing amount on.
The benefits of a bank statement loan
As an international investor, this type of loan offers many advantages. One of the biggest benefits is that it requires less documentation than a traditional mortgage. Since the lender focuses on your bank statement deposits rather than tax returns, you avoid having to provide as much paperwork. This can really streamline the process.
Bank statement loans also allow you to qualify based on deposits rather than unverifiable income. For international investors who may have complex financial situations, this provides a concrete way to demonstrate repayment ability.
In addition, bank statement loans are ideal if you have significant write-offs that reduce your taxable income. They look beyond your reported income to your actual cash flow. This allows your true earning potential to be considered.
Other advantages include faster closing times since less documentation is required and potentially higher loan-to-value ratios than other loan types. Overall, bank statement loans provide international investors with an accessible path to financing investment properties when tax returns alone don't tell the full story.
Who is a good fit for a bank statement loan?
Bank statement loans are the perfect solution for international investors who are self-employed or own their own business. They accommodate those who have significant write-offs that reduce taxable income but still show strong deposits each month.
Even if you keep money in the business for reinvestment, bank statement loans consider your cash flow rather than retained earnings. As long as you have stable deposits month-over-month in your personal and/or business accounts, this demonstrates repayment ability.
In short, by showing 12-24 months of regular deposits, you may qualify for a mortgage even if you do not have traditional W-2 income reported on tax returns. For international investors who fall outside the norm, bank statement loans offer a customize path to financing.
Get started with an online loan application
Ready to purchase your investment property in the US? The fastest way to get started is by completing an online loan application with Milo.
Milo offers a fully digital mortgage experience that can match you with your ideal loan options in minutes. Our online application will identify the optimal loan program for your situation and specific financial profile. You can even lock in rates and close in as fast as 30 days!*
As leading experts in bank statement loans, Milo has helped countless international investors like yourself fund their real estate investments in the US.
Understanding Bank Statement Mortgages. SoFi. What is a Bank Statement Loan?. Bankrate. Self-Employed Mortgage Lenders for Bank Statement Loans. The Mortgage Reports.
*Mortgage closing times can vary based on various factors, including but not limited to the complexity of the mortgage application, the responsiveness of involved parties, unforeseen underwriting issues, and market conditions. While every effort is made to expedite the mortgage closing process, it is essential to consider that individual circumstances may lead to longer closing times beyond the 30-day period.
The opinions expressed in the Blog are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security or investment product.
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