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Yes, as a Florida resident, you can qualify for a mortgage using only your bank statements. This type of loan, known as a bank statement mortgage, is designed for individuals who may not have traditional forms of income verification, such as W-2s or tax returns. This option is particularly popular among self-employed borrowers, freelancers, or small business owners who have variable income but maintain a steady cash flow reflected in their bank statements.

Here’s what you need to know about qualifying for a bank statement mortgage in Florida.

What Is a Bank Statement Mortgage?

A bank statement mortgage allows you to qualify for a home loan by using your bank statements to prove your income rather than traditional documentation like W-2s, tax returns, or pay stubs. Lenders look at the deposits made into your bank account over a certain period—typically 12 to 24 months—to assess your income and determine how much you qualify to borrow.

These loans are ideal for individuals who have inconsistent income or large tax deductions that make their taxable income appear lower than their actual earnings.

Who Qualifies for a Bank Statement Mortgage?

Bank statement mortgages are ideal for borrowers who are:

  • Self-employed: Business owners, freelancers, and independent contractors often rely on bank statement loans because their income is variable, and tax returns may not reflect their true earnings due to deductions.
  • Entrepreneurs or Small Business Owners: If you own a business in Florida, you might have substantial cash flow, but your tax returns may not accurately reflect your income. Bank statement loans take your total deposits into account instead of relying solely on tax filings.
  • Commission-Based Employees: Those who earn commissions, such as real estate agents, can benefit from bank statement mortgages since income may fluctuate significantly from month to month.
  • Gig Workers or Freelancers: Individuals working in the gig economy or freelancing may not have traditional income documentation but can prove consistent earnings through bank statements.

How Do Bank Statement Mortgages Work?

Bank statement mortgages operate differently from traditional home loans in terms of income verification. Here’s how the process typically works:

  1. Provide Bank Statements: Lenders will ask for 12 to 24 months of bank statements, either personal or business accounts, to evaluate your income. They’ll review deposits, not withdrawals or balances, to determine your average monthly income.
  2. Calculate Average Income: Lenders calculate your average income by adding up the deposits over the period and dividing them by the number of months. In the case of business bank statements, lenders may apply an expense ratio to account for business expenses, typically ranging from 30% to 50% of your deposits.
  3. Loan Amount Determination: Once your average monthly income is determined, the lender will use that figure to calculate how much mortgage you qualify for, factoring in your debt-to-income (DTI) ratio and other financial details.
  4. Down Payment Requirements: Bank statement mortgages usually require a larger down payment than traditional loans. You may need to put down anywhere from 10% to 20% of the home’s purchase price, depending on the lender and your financial profile.

Advantages of Bank Statement Mortgages

Bank statement mortgages offer several benefits to Florida residents, particularly those with non-traditional income streams:

  1. No Tax Returns Required: Since your loan approval is based on your bank statements, you won’t need to provide tax returns, which is helpful for those whose taxable income doesn’t reflect their true earnings.
  2. Flexible Income Verification: This type of loan is ideal for those with variable or fluctuating income, such as self-employed borrowers, freelancers, or gig workers.
  3. Higher Loan Limits: Many bank statement mortgage programs offer higher loan limits, which can be beneficial for purchasing higher-value homes in Florida’s competitive real estate market.
  4. Personal and Business Bank Statements Accepted: Lenders often allow you to use either personal or business bank statements to qualify, giving you more flexibility based on how you manage your finances.

Challenges of Bank Statement Mortgages

While bank statement mortgages are a great option for many borrowers, they do come with some challenges:

  1. Higher Interest Rates: Since bank statement mortgages are considered non-qualified mortgages (non-QM), they tend to have higher interest rates compared to traditional loans. This reflects the increased risk that lenders take by not relying on standard income documentation.
  2. Larger Down Payment: You’ll likely need to make a larger down payment, typically between 10% and 20%, depending on your credit score and other factors. This is higher than the down payment required for traditional FHA or conventional loans.
  3. Stricter Approval Requirements: Lenders may have stricter approval requirements, including a higher credit score and a lower debt-to-income (DTI) ratio to mitigate the risks of variable income.

Requirements for a Bank Statement Mortgage in Florida

To qualify for a bank statement mortgage in Florida, you’ll typically need to meet the following requirements:

  1. Credit Score: Lenders usually require a minimum credit score of 620-680 for a bank statement mortgage. The higher your credit score, the better terms you’re likely to receive.
  2. Down Payment: You’ll need to make a down payment of at least 10% to 20% of the home’s purchase price. Some lenders may allow a lower down payment if you have a higher credit score or other compensating factors.
  3. Bank Statements: You must provide 12 to 24 months of bank statements, showing consistent deposits that reflect your true income. Lenders will focus on your gross deposits, so it’s essential to have steady cash flow.
  4. Debt-to-Income Ratio (DTI): Most lenders require a DTI ratio of 43% or lower, though some may allow higher DTIs depending on your financial profile.

How to Strengthen Your Application for a Bank Statement Mortgage

If you want to improve your chances of getting approved for a bank statement mortgage, here are some strategies to consider:

  1. Increase Your Credit Score: The higher your credit score, the better your chances of qualifying for a bank statement mortgage. Paying down credit card balances, avoiding new debt, and making on-time payments can help boost your score.
  2. Save for a Larger Down Payment: Having a larger down payment can make you a more attractive borrower to lenders and may help you secure better interest rates.
  3. Provide Strong Documentation: Be prepared to provide thorough documentation of your financial history, including bank statements, business licenses (if applicable), and other relevant financial records.

Conclusion: Can You Get a Mortgage Using Only Bank Statements in Florida?

Yes, you can get a mortgage in Florida using only your bank statements. Bank statement mortgages are an excellent option for borrowers with non-traditional income, such as self-employed individuals, freelancers, and business owners. While these loans come with higher interest rates and larger down payment requirements, they offer flexibility for those who cannot or prefer not to provide traditional income verification like W-2s or tax returns.

If you’re ready to explore your mortgage options and see if a bank statement loan is right for you, Select Home Loans can help guide you through the process. Contact SelectHomeLoans.com today to learn more about how to qualify for a bank statement mortgage in Florida.