If you’re self-employed or a business owner looking to buy a house, a bank statement loan might be a better option than a conventional mortgage. #bankstatementloan #selfemployed #businessowner #mortgageoptions #buyingahouse #mortgagetips #homebuyingtips #buyingahomein2024

If you're self-employed in your one-to-buy house, here's why a bank statement loan can be a smarter choice than a conventional loan. Instead of lowering the expenses that you report to show more income, a bank statement loan might be a better option. So let's say that you want to buy a $450,000 house. If you're going to normal conventional route, you're going to need to show a minimum $80,000 in net income. To show this, you might have to reduce the amount of expenses that you're showing on your tax returns, which is going to increase the amount that you pay to the IRS. Showing more income, you're going to owe the IRS more money. So let's say, in this case, showing $80,000 in net income is going to cost you $24,000 to the IRS. Here's a better way. Instead of paying more to the IRS, you can continue writing off expenses like you normally do and get a bank statement loan. Yes, bank statement loans are going to have a higher interest rate, but let's compare the numbers. So with that $450,000 house with 5% down on a 30-year mortgage, a conventional loan with a 6 and a half percent interest rate is going to give you a principal and interest payment of about $2,700 a month. Let's say the bank statement loan has an 8% interest rate that's going to give you a $3,100 a month payment. So it's going to cost you an extra $430 a month to have the bank statement loan. Or $5,200 for the year. Being able to have the same expenses like you normally do on your tax returns is going to save you an extra $20,000 that you would have owed to the IRS. So for self-employed people, bank statement loans can make more sense because it's going to balance out that higher interest rate with tax savings.