NO Tax Return-Florida Cash-Out Refinance Lenders

BORROWERS MUST BE SELF-EMPLOYED TO QUALIFY FOR THIS PROGRAM.
DOCUMENT REQUIREMENTS
(1) 12 or 24 months Personal or 24 months Business Bank statements
 Borrowers who own more than 3 businesses must use personal bank statements option
 Bank statements must be most recent available at time of application and must be consecutive
(2) Profit & Loss Statement
 If submitting personal bank statements, a P&L prepared by the borrower covering no less than 12 or 24 months is required

(2) Profit & Loss Statement
 If submitting personal bank statements, a P&L prepared by the borrower covering no less than 12 or 24 months is required
 The P&L must be signed by the borrower
 If submitting business bank statements, a P&L prepared by the borrower covering no less than 24 months is required
 Borrower is required to provide separate P&Ls for each business being used in qualifying.
 The P&L should generally cover the same calendar months as the bank statements provided.
(3) Validation of a minimum of 2 years existence of the business from one of the following: Business License, Letter from Tax Preparer, Secretary of State Filing or
equivalent

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 bank statements and the wage earner providing pay stubs/W-2s. The wage earner 4506T should include W-2 transcripts only.

BANK STATEMENT MORTGAGE PROFIT & LOSS ANALYSIS
• Net Income from the P&L will be used as Qualifying Income for both personal and business bank statements.
• The P&L used for qualifying must be signed by the borrower.
• Declining Income requires an LOE
• Any amounts on the P&L representing salary/wages paid to the borrower/business owner can be added back and considered in the net income analysis.
• Expense line items that can be added back to the business net income include depreciation, depletion, amortization, casualty losses, and other losses or
expenses that are not consistent and recurring.
• Borrowers utilizing business bank statements that own > 50% but < 100% of a business will be qualified at the P&L/AES net income multiplied by their ownership
percentage.
• The P&L expense ratio, Gross Income minus Net Income, divided by Gross Income, should be reasonable for the profession.
Example: A home-based sole practitioner therapist/consultant can be expected to have a low expense ratio, while a retail business that has a full staff of
employees and relies heavily on inventory to generate income will have a high expense ratio.
• If the file does not contain a CPA prepared P&L, steps must be taken by the underwriter to evaluate the reasonableness of the expenses listed by the borrower.
• This requires the borrower to provide a business narrative which includes detail related to the size/scope and operating profile of the business, including the
following: o Description of Business/Business Profile o Location & Associated Rent o Number of Employees / Contractors o Estimated Cost of Goods Sold (Does
business involve sale of goods or just services?) o Materials/Trucks/Equipment o Commercial or Retail client base? o Business Analysis
• Expenses listed on a borrower prepared P&L should generally relate to the information provided below.

CASH OUT BANK STATEMENT MORTGAGE ANALYSIS
• Eligible deposits from the bank statements should generally be within +/- 10% of the gross income (business accounts) or net income (personal accounts) as
shown on the P&L.
• Transfers from other bank accounts into the business bank accounts will require conclusive evidence that the source of transfer is business related income
• An Income calculated with bank statement documentation should be consistent with income documented by the borrower on the loan application
• Borrowers income on the 1003 should never be used for qualifying, even if it is less than the P&L income calculated above
• Any deposits into a personal account deemed to derive from a source other than the business (rents, SSI, joint account holder wage income, IRS refunds)
must be excluded from the analysis
• NSFs require a borrower LOE to evaluate that they are not due to financial mishandling and/or indicative of insufficient income
• NSFs should be covered with deposits shortly after they are incurred.
• Unusually large deposits exceeding 50% of monthly income (as defined by Fannie Mae) into personal accounts must be documented and explained via LOE,
and must be consistent with the business profile. If LOE is sufficient, no sourcing required.
• Transaction history printouts are not acceptable.
• Multiple bank accounts may be used.
• Co-mingling of personal and business receipts and expenses in Personal Bank Accounts is not permitted. Evidence of comingling will require the loan to be
submitted and qualified as a business bank statement loan.
• If personal bank statements provided reflect payments being made on obligations not listed on the credit report, a thorough analysis must be performed and
LOE provided from the borrower, as outlined below.
Bank statement loans submitted with tax return documentation or transcripts are ineligible.

 Joint Accounts – A joint personal account with a non-borrowing spouse or domestic partner can be used for qualifying as follows: o If not contributing
income/deposits, it must be validated by a borrower affidavit o If contributing income/deposits, source must be clearly identified (direct deposit, SSI, trust
income) and amounts must be subtracted from the analysis o Relationship letter must be present in file
 Retirement, Government Annuity, and Pension Income – GB may recognize an ancillary income stream from employment-related assets as eligible for
income qualification. Borrower must evidence a 12 month history of documented draws or interest/dividend income. If, based on that history, the income will
continue for at least three years, the income may be used for loan qualification. One of the following types of income documentation is required: o Copy of
award letter or letters from the organizations providing the income o Most recent personal income tax return with all schedules o Most recent W2 or 1099 o
Most recent 2 months bank statements showing deposit of funds
If the income being used for qualifying represents at least 50% of the borrower’s total income, a five year continuance is required. The borrower must have
unrestricted access, and available to the borrower without penalty. Documentation of asset ownership must be in compliance with the allowable age of credit
documents.
 Restricted Stock Income – GB will only consider restricted stock that was awarded in prior 2 years and became unrestricted (vested) in the current year. The
Vesting Schedule must indicate the income will continue for a minimum of 3 years at a similar level to the prior 2 years. Continuance is based on the vesting
schedule using a stock price based on the 52 week low for the most recent 12 months reporting at the time of closing. A 2 year average of prior income
received from RSU’s or stock option will be used. The following documentation is required: o Copy of the vesting schedule o Most recent W2 and pay stub o
Private Stock not eligible.
 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 should be
separately documented on the 1003 and should be separately supported by bank statement deposits.
o Rental Income –
months via cancelled checks, deposits clips, or bank records ed by a vacancy/expense factor of
25%
o Trust Income – idenced byunt, distribution frequency, and duration of payments

o Alimony Income –
deposit slips, or bank records
o Note Receivable Income opy of the note confirming amount and length of payment
checks, deposit slips, or bank records

Category: NO Tax Return Florida Cashout Florida Mortgage Lenders