STATED TEXAS MORTGAGE LENDERS-PRIMARY HOME
- No tax returns required
- Bank statement deposits used to qualify
- 24 months’ personal bank statements (Personal and Business)
- Loans up to $2 million
- Credit scores down to 600’s
- Rates starting in the low 5’s
- Up to 85% LTV
- DTI up to 50% considered
- Owner-occupied, 2nd homes, and investment properties
- 2 years seasoning for foreclosure, short sale, BK, DIL
- Non-warrantable condos considered
- Jumbo loans down to 660 score
- 5/1 ARM or 30-year fixed
- No pre-payment penalty for owner-occ and 2nd homes
- SFRs, townhomes, condos, 2-4 units
- Seller concessions to 6% (2% for investment)
- 2 year self-employed required
- Borrower must be Self Employed
- Personal or Business Statement Accepted
- 50% MAXIMUM DTI FOR BANKSTATMENTS
- 24 months to qualify / Mortgage Late Payments, Short Sales, BK = OK!!
- Bank statement lenders minimum 580 FICO!
STATED INCOME TEXAS MORTGAGE PROGRAMS
Texas mortgage lenders offers three stated Documentation Programs:
- Full Documentation (“Full Doc”)
- Alternative Income (“Alt Doc Bank Statements”) for Owner Occupied properties
- Alternative Documentation (“Alt-Doc Cash Flow”) for Texas Non-Owner Occupied or Texas Second Home properties and Business Loan requests.
The below information is a summary of the minimum Texas stated loan documentation requirements for each Income Documentation Program. For additional documentation requirements, refer to the Income Doc Charts in this section of the Guide.
–ALTERNATIVE DOCUMENTATION / BANK STATEMENTS- STATED INCOME
Texas Self-employed ONLY Borrowers (Must be able to verify self-employment income)
- Last twenty-four (24) months personal or business bank statements with all pages required for all months.
- Stated Texas Mortgage Income is determined by using the gross monthly amount of deposits with deduction of any itemized debits or other expenses that are verified by a tri bureau merged credit report.
- Max six (6) NSF checks in the last twelve (12) months.
- Acceptable documentation supporting the existence of the business for the most recent two (2) years must be obtained. (Refer to the Acceptable Evidence of Self-employed Business).
FULL DOC / WAGE EARNER
- VOE completed in full by employer verifying most recent two (2) years (Verbal verification of VOE required) and current year-to-date earnings on a current pay stub OR
- W-2 for most recent two (2) years & current pay stub reflecting year-to-date earnings OR
- Signed 1040’s for most recent two (2) years & current pay stub reflecting year-to-date earnings
Fixed & Other Sources
Current award/retirement letter; AND
Copy of the most recent bank statement showing automatic deposit (deposit must specifically reference the source of the deposit); OR
1099 for most recent year
Acceptable documentation supporting existence of the business (“Refer to the Acceptable Evidence of Self-employed Business”)AND
Verification of income covering the most recent two (2) years and year-to-date earnings with signed 1040’s as well as other applicable supporting documentation (i.e. 1120’s, K-1s etc.)
100% Commission / Bonus
Verbal VOE, to confirm borrower’s employment and commission/bonus AND
Signed 1040’s for most recent two (2) years with current pay stub reflecting year-to-date earnings (if not pay stub no applicable, obtain bank statements covering year-to-date)
Salaried + > 25% Commission / Bonus
- Signed 1040’s for most recent two (2) years AND current pay stub reflecting year-to-date earnings (pay stub must reflect salaried wage + commission / bonus)
–STATED TEXAS MORTGAGE LOANS EXPLAINED
If you are self-employee stated Texas home loan applicant, you already know the benefits that come with making your own decisions and never having to report to a boss. However, there are some disadvantages to generating your own self employed income when it comes to applying for a stated Texas home loan.
“There are two main problems that self-employed Texas borrowers face when qualifying for a Texas mortgage,” “First, you need to prove their income with tax returns rather than using a ‘stated income’ loan. Second, the recent housing recession has caused declining income for many Texas self-employed business owners. Even if their income has stabilized, the stated Texas home loan will be based on the average of your last two years of tax returns, which could show reduced income.”
Stated income Texas home loans were originally designed for self-employed people, but were abused by too many Texas business owners that were buying homes they could not afford.
“Stated Texas income loans are starting to make a small comeback on the secondary market, but only for Texas Mortgage applicants with good credit scores of at least 640 or above, a down payment of 25 percent of the sales price or more and at least six months of future cash payment reserves to cover all monthly obligations.
“In the mid-1990s we Texas stated lenders started using bank statements statements to show cash flow for self-employed people and was a good way to get a lot of Texas home buyers approved for Stated Texas home loans.
– TEXAS SELF EMPLOYED BORROWERS INCOME AND TAXES
Self-employed stated Texas mortgage applicants must complete Internal Revenue Service Form 4506-T, which allows stated Texas mortgage lenders to request tax transcripts. Texas stated mortgage lenders are required to wait until the tax returns have been recorded by the IRS and must receive them directly from the IRS to verify legitimate returns.
Many Texas self-employed individuals report expenses on their taxes in order to reduce their tax liability, but this can backfire when they apply for a mortgage.
“Self-employed stated Texas mortgage applicants people typically report their gross income minus expenses to generate a net income,”. “For tax purposes, it may be beneficial to have net income as low as possible, but the net income is the number used for income qualification.”
For example, a Texas business owner that claims $100,000 in income and $80,000 in expenses will find it nearly impossible to qualify for a traditional Texas mortgage. At this point a self-employed Texas home buyers has no other option but to apply using a stated Texas mortgage lender.
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