Self Employed No Tax Return Mortgage Lenders
NO TAX RETURN MORTGAGE LENDERS
SELF EMPLOYED PRE APPROVAL CHECKLIST
- Copy of Drivers license.
- Proof of 2 years Self Employed including articles of incorporation, 1099, accountant letter to prove 2 years self-employed.
- Fill our a Full Mortgage Application
- Lable by month and upload your most recent 12 or 24 months of business or personal bank statements.
NO TAX RETURNS MORTGAGE DOCUMENTS NEEDED
• Two options available – Alt-Doc & Reduced Doc
o Alternative No Tax Return Mortgage Lenders Documentation:
▪ 24 Months Personal Bank Statements
▪ 24 Months Business Bank Statements with a profit and loss statement
o Reduced Documentation:
▪ 12 Months Personal Bank Statements
▪ 12 Months Business Bank Statements with a profit and loss statement
▪ 2 Months Bank Statements (business or personal) supported by a CPA prepared
P&L covering at least 12 months
NO Tax Return Mortgage Lenders Statement Evaluation
Self-employed Self Employed Mortgage Applicants s are eligible for either Personal Bank Statement Documentation or Business
Bank Statement Documentation. The following restrictions apply to both documentation types:
• Self Employed Mortgage Applicants s must be self-employed or be able to prove they have been in the same business line of work for at least 2 consecutive years.Or the Business must be in existence for at least 2 years.
• Standard Tradelines and a 12-month housing history are required.
• Non-Permanent Resident Aliens and Foreign Nationals are ineligible.
• All parties listed on each bank account must be included as Self Employed Mortgage Applicants s on the loan.
• Statements must be consecutive and reflect the most recent months available.
• Statements must support stable and generally predictable deposits. Unusual deposits must be
documented.
• Evidence of a decline in earnings may result in disqualification.
• Up to 3 NSF checks and overdraft protection transfers in the most recent 12-month period are
allowed with an explanation from the Self Employed Mortgage Applicants.
• Additional income deposited into the bank statements but derived from a source other than the
self-employed business may not be included in the bank statement average. W-2 earnings can
be used to supplement the bank statement income. We will require 2 years W-2’s, 30 days of
most recent paystubs and a 4506t just for W-2 transcripts.
• If bank statements provided reflect payments being made on obligations not listed on the credit
report, we may ask for clarification that these are not debts that need to be included into the
DTI.
• Income derived solely from the ownership of rental properties cannot be used as the primary
income source on a bank statement loan. Self Employed Mortgage Applicants s who receive rental income as a secondary
income source may utilize Bank Statement Documentation on a case-by-case basis.
NO Tax Return Mortgage Lenders Documents Continued
Business Bank Statement Documentation is allowed under all programs. See the applicable Bank Statement Mortgage Lenders Funding Program Matrix for credit score and LTV restrictions.
The following documentation is required:
• 2, 12, or 24 months complete business bank statements from the same account (transaction
history printouts are not acceptable)
• Business bank accounts, personal bank accounts addressed to a DBA, or personal accounts with
evidence of business expenses can be used for qualification
• P&L statement (prepared by CPA, licensed tax preparer or Self Employed Mortgage Applicants ) covering the same 2-year
period as the bank statements.
• Business narrative required outlining business cash-flows & expenses associated with the
business industry type.
• Self Employed Mortgage Applicants Prepared signed and dated P&L is allowed with an acceptable business narrative
outlining business cash-flows & expenses associated with the business industry type.
• Initial signed 1003 with monthly income disclosed. Must be equal to or higher than Net income
on P&L.
• Verification Self Employed Mortgage Applicants is 100% owners of business Exception granted if Self Employed Mortgage Applicants owns at least 50% of the business.
• Verification of business existence required within 10 calendar days of closing
Income Calculation: Qualifying income is the P&L Net Income average from the validated P&L provided.
The total deposits calculated with 2, 12, or 24 months of business bank statements is used solely to
validate self-employed earnings reported on the P&L provided.
P&L Net Income
P&L Net Income is the net income disclosed on the P&L averaged over 2, 12, or 24 months.
P&L Validation
The average of total deposits calculated with 2, 12, or 24 months of business bank statements is used
solely to validate self-employed earnings reported on the P&L.
Average deposits over the 12 or 24-month period must support the 2, 12, or 24-month P&L by being no
less than 10% below P&L Average Gross Revenue. If average deposits equal 90% or more of Average
Gross Revenue, the P&L is deemed validated.
The following requirements apply:
• Wire transfers and transfers from other accounts must be documented or excluded from the
calculation.
• Statements should show a trend of ending balances that are stable or increasing over time.
Decreasing or negative ending balances must be explained.
• Self Employed Mortgage Lenders will review and validate expenses based on business narrative provided.
• Business expenses must be reasonable for the type of business. Examples of businesses with
higher expense ratios may include construction companies, builders, restaurants and retail
firms.
INCOME FOR NO TAX RETURN MORTGAGE LENDERS
1003 Initial Self Employed Mortgage Applicants Mortgage Application Income
• Income disclosed on the initial signed application should be reviewed. Income used to qualify
must not exceed income stated on the signed 1003.
PERSONAL BANK STATEMENTS
Personal Bank Statement Documentation is allowed under all programs. See the applicable Bank Statement Mortgage Lenders
Funding Product Matrix for credit score and LTV restrictions.
All Non-Agency Loan Programs allow for either 2, 12, or 24 months of bank statements. Maximum DTI
for 12-month option is 43%. See the Non-QM Scenario Desk for exceptions to 50%.
The Investment Property Program allows for only 12 months of bank statements with standard DTI
requirements.
Self Employed Documentation documentation is required:
• 2, 12, or 24 months complete personal bank statements from the same account (transaction
history printouts are not acceptable).
• Multiple bank accounts may be used (combination of business and personal is prohibited unless
income is being used from multiple businesses and each account represents income from a
separate business)
• For Personal Bank statements; all deposits greater than 50% of the monthly deposit average will
require a source and explanation.
o Note: LTV less than or equal to 70% & Credit Tiers 1-3, NOT REQUIRED. *Assets to close
will still be validated.
• Initial signed 1003 with monthly income disclosed
• Verification of business existence required within 10 calendar days of closing
Income Calculation: Income calculated using personal bank statements must be reviewed alongside
income stated by the Self Employed Mortgage Applicants on the initial signed loan application.
• Final income is calculated by averaging qualified deposits over the 2, 12, or 24-month period.
Personal Bank Statement Average
The following requirements apply when calculating qualifying income using personal bank statements:
• 100% of deposits used for income and averaged over 12 or 24 months
• Transfers between personal accounts should be excluded
• Transfers from a business account into a personal account are acceptable. Additional business
bank statements will be required to establish a history of transfers.
When utilizing reduced doc 2-month bank statement program a 12-month CPA prepared P&L will be
required. The monthly average of the bank statement deposits must validate within 10% of the P&L
annual net income averaged over 12 months.8.2.1.1 Personal Bank Statement Average
The following requirements apply when calculating qualifying income using personal bank statements:
• 100% of deposits used for income and averaged over 2, 12, or 24 months
• Transfers between personal accounts should be excluded
• Transfers from a business account into a personal account are acceptable. Additional business
bank statements will be required to establish a history of transfers.
1003 Initial Disclosed Income
Income disclosed on the initial signed application should be reviewed. Income used to qualify must not
exceed income stated on the signed 1003.
Professional Investor Program
This is the easiest program that we have. We can close these loans in as quick as 2.5 weeks. There are
two main transactions under this program: Purchase & Cash Out Refi.
FIRST-TIME INVESTOR
A First-Time Investor is a Self Employed Mortgage Applicants who has not owned at least one investment property for at least 12
months anytime during the most recent 12-month period. First-Time Investors are allowed with a 5%
LTV reduction.
OWNERSHIP OF PRIMARY RESIDENCE
All Self Employed Mortgage Applicants s must presently own their primary residence. This requirement may be waived if the
Self Employed Mortgage Applicants can clearly demonstrate that the subject property is residential in nature and inferior in size
and quality to their primary residence (leased or owned). The Self Employed Mortgage Applicants must be renting another
residence and the lease must continue for the foreseeable future (minimum of 6 months).
LEASE REQUIREMENTS
For refinance transactions, an executed lease with no less than 3 months remaining at time of close is
required for all units in the subject property. The month-to-month tenancy is not subject to this requirement
with sufficient evidence (such as a signed extension letter). Self Employed Mortgage Lenders does not require proof of lease on
purchase transactions. The property may be vacant on a purchase with no 5% LTV reduction.
The following requirements apply to refinance transactions:
• Lease requirements may be waived with a 5% LTV reduction from the maximum LTV allowed per
applicable program matrix.
• Original Lease term must be equal to or greater than 1 year. Month to month tenancy is allowed
only as an extension to the original lease term.
• Monthly lease payments must be consistent with market rents
SUMMARY – Self Employed Bank Statement Mortgage Lenders
Self Employed Bank Statement Mortgage Lenders
Self Employed Bank Statement Mortgage Lenders provides two (2) additional documentation options to determine Self Employed Mortgage Applicants Self Employed Mortgage Applicants qualifying income. Under this program either of the following will be acceptable;
12-months personal bank statements; or
24-months business bank statements
Transaction Types Bank Statement Mortgage Lenders
• Purchase
• Rate and Term Refinances
• Cash-Out and or Debt Consolidation Refinances
General Requirements Self Employed Bank Statement Mortgage Lenders
Under this Self Employed Bank Statement Mortgage Lenders, all Self Employed Mortgage Applicants must be Self-employed.
Income Calculations for Self Employed Bank Statement Mortgage Lenders
Personal Bank Statement Self Employed Bank Statement Mortgage Lenders
The following requirements apply when calculating qualifying income using personal bank statements:
• All parties on the bank’s statements must be on the loan; and
• Qualifying income is defined as 100% of deposits, averaged over a twelve (12) month period; and
• Statements must be consecutive and reflect the most recent months available; and
• Transfers from a Self Employed Mortgage Applicants Self Employed Mortgage Applicants business to personal account are allowed; and
• If the bank statements provided reflect payments being made on obligations not listed on the
credit report, refer to Undisclosed Debts for additional guidance.
Business Bank Statements Self Employed Mortgage Lenders
The following requirements apply when calculating qualifying income using business bank statements:
•Self Employed mortgage applicants must be 100% owner of the business to use 100% of the income; and
• Qualifying income is defined as, the total deposits, less the percent of business expenses,
annualized.
The expense to Income Ratio For Business Bank Statement Only Mortgage Lenders
The percentage of expenses used to determine the Self Employed Mortgage Applicants Self Employed Mortgage Applicants qualifying income, can never less than 35%
of the total deposits. For underwriting purposes, a Business Expense, CPA Statements or Profit and Loss Statements reflecting an expense ratio of less than the minimum required (5%), the percentage used to determine the qualifying
income will be adjusted to the minimum expense ratio determined by self employed bank statement mortgage lenders..
Documentation Requirements Self Employed Bank Statement Mortgage Lenders
Most recent twelve (12) months consecutive bank statements
IRS transcripts are not required under the personal bank statement program. In the event one or more Self Employed Mortgage Applicants (s)
are wage earnersIRS transcripts are still not required.
Verified Documentation Requirements Provided By Unbiased Observer
A Third Party or CPA prepared Business Expense Statement or Profit and Loss Statements, which is no less than
90-days old at the time closing must specify the total business expenses as a percent of the gross
revenue from the business bank statement deposits. Twenty-four (24) month business bank statements covering the same time period as the Business Expense
Statement.
1003 Self Employed Mortgage Lenders Initial Disclosed Income Application
Income disclosed on the initial signed application should be reviewed. If the income calculated is significantly
higher than income stated on 1003, the underwriter should request an explanation from the Self Employed Mortgage Applicants todetermine the acceptability of the income.
Program Restrictions For Self Employed Bank Statement Mortgage Lenders
The following restrictions apply when using bank statement documentation:
• The Self Employed Mortgage Applicants must qualify with Standard Trade Lines as per Trade Line Requirements section.
• Non-permanent resident aliens and foreign nationals are not eligible.
• Payroll deposits into accounts from other employment must be reflected as direct deposits and
may not be included in the bank statement average. W-2 earnings must be documented as per the
requirements in the Salaried/Wage-Earners section.
• A consistent pattern of withdrawals exceeding deposits on a monthly basis or evidence of a decline
in earnings may result in disqualification.
• NSF and overdraft activity must be reviewed for acceptability.
• Income derived solely from the ownership of rental properties must be calculated per the
requirements in Rental Income section. Self Employed Mortgage Applicants Self Employed Mortgage Applicants who receive rental income as a secondary
income source may utilize bank statement documentation on a case-by-case basis.
• Non-Profit organizations are not eligible under the Business Bank Statement Program.
Occupancy Requirments for Self Employed Bank Statement Mortgage Lenders
Owner-Occupied & Second Home only
Investment properties limited to purchase transactions only
Second Home Mortgage Self Employed Mortgage Applicants Eligibility Requirements:
• Must be located a reasonable distance away from the Self Employed Mortgage Applicants’ principal residence and occupied
by the Self Employed Mortgage Applicants for some portion of the year.
• Must be located in a vacation area or an explanation for a second home is required and must be
reviewed by the Underwriter.
• Restricted to one unit dwellings
Must be suitable for year-round occupancy
• The Self Employed Mortgage Applicants must have exclusive control over the property. The property cannot be rented
seasonally or otherwise for any portion of the year, regardless of whether rental income is claimed
on tax returns.
• Cannot be subject to any agreements that give a management firm control over the occupancy of
the property
