Bank Statement Loan Calculator
A bank statement loan calculator is a financial tool designed to assist borrowers and lenders in evaluating mortgage eligibility and affordability based on bank statement data. Unlike traditional mortgage calculators that rely on standard income documentation such as tax returns or W-2 forms, a bank statement loan calculator analyzes patterns and consistency of deposits reflected in bank statements to estimate income and assess loan eligibility.
Key features of a bank statement loan calculator typically include
- Income Analysis
- Expense Evaluation
- Debt-to-Income (DTI) Ratio Calculation
- Loan Amount Estimation
- Customization Options
Income Analysis
The calculator reviews bank statements to identify and analyze regular income deposits, irregular deposits, and other sources of revenue. It considers the frequency and consistency of deposits to estimate the borrower’s income for mortgage qualification purposes.
Expense Evaluation
It examines the outflows from the bank account to assess the borrower’s monthly expenses, including recurring payments, bills, and other financial obligations.
Debt-to-Income (DTI) Ratio Calculation
The calculator calculates the borrower’s debt-to-income ratio, which is a crucial factor in determining mortgage eligibility. It compares the borrower’s total monthly debt payments to their gross monthly income.
Loan Amount Estimation
Based on the borrower’s income, expenses, and DTI ratio, the calculator estimates the maximum loan amount the borrower may qualify for.
Customization Options
Some bank statement loan calculators may offer customization options to adjust parameters such as interest rates, loan terms, and down payment amounts to provide more accurate estimates.
What Is Bank Statement Loan Calculator?
- A bank statement loan calculator is a financial tool that helps customers calculate their eligibility for a bank statement loan.
- This loan is designed for people who work for themselves or own businesses and have incomes that aren’t consistent. They might not have the usual paperwork like pay stubs or tax returns to show their income.
- The calculators use information provided by users, such as their monthly income and expenses, any debts they have each month, the amount they plan to pay as a down payment, how long they want the loan to last, and the interest rate they expect to pay on the loan.
- Using this information, the calculator provides users with an estimate of the mortgage they might qualify for and helps them understand what price range of houses they could afford.
How do bank statement loans work?
Getting a bank statement loan is a bit different from getting a regular mortgage. It can be a bit tougher to get preapproved or prequalified.
When you apply, you’ll need to give the lender your bank statements from both personal and business accounts, going back as far as two years.
You’ll also have to share other details about your business and expenses if they’re relevant.
“The type of business, how many people work there, and if the business has a physical location are some of the things bank statement lenders will ask about to figure out your expenses,” explains Darrin Seppinni, who is the president of HomeLife Mortgage, a lender in California that focuses on bank statement loans.
How to Use the Bank Statement Loan Calculator
Figuring out how much you can borrow for a home loan is crucial before you start house hunting. It helps you focus on homes within your budget. We’re here to assist you in figuring out how much home you can afford based on your finances. Follow these steps to get an estimate of your home affordability using a bank statement loan:
1. Check Your Loan Type
Our bank statement loan calculator is designed to work for both personal and business property loans. It helps borrowers of all kinds figure out how much they can afford to borrow.
2. Enter Bank Statement & Other Income Information
Your income plays a big role in deciding if you can pay back the loan. Input your bank statement income, along with your yearly gross income and down payment, to find out how much you can borrow.
Keep in mind, the more you can put down initially, the less you’ll need to borrow. Also, if you can manage a down payment of 20%, you won’t have to pay private mortgage insurance (PMI), which means lower monthly payments.
3. Provide Monthly Debt Information
We calculate how much money you have available each month by subtracting your monthly debts from your monthly income. These debts include:
- Credit cards
- Mortgages
- Auto loans
- Student loans
- Personal loans
- Child support and alimony
4. Indicate Monthly Housing Expenses
Your monthly housing expenses cover things like property tax, PMI, HOA fees, utilities, and homeowners insurance. Our bank statement mortgage calculator takes these expenses into account by subtracting them from your total monthly income to figure out how much you can borrow.
5. Enter Available Fund Amounts
How much money do you have saved up for buying a home? Inputting your available funds for the down payment, closing costs, and the maximum principal and interest (PI) payments can help us figure out if you can afford the loan and its associated costs.
6. Provide Funding Information
Let us know about the loan you’re interested in, such as the loan term, interest rate, down payment, home price, estimated closing costs, and the total loan amount you’re considering.
Example Of Bank Statement Mortgage Loan Calculation
Let us understand the workings of the calculator better with a few examples.
Example 1
Let’s figure out what numbers to put in the boxes.
- Your gross monthly income before taxes is $7000.
- Your monthly expenses amount to $600.
- Your monthly debt totals $1500.
- To calculate the total monthly expenses and debt, add $600 to $1500, which equals $2100.
- You’re prepared to make a down payment of $8000.
- You’re looking at a loan term of 30 years.
- The interest rate for your loan is 6.5%.
Once you’ve filled in all these details, the calculator will display the final amounts for the mortgage you can expect and the house prices you can afford.
Based on the provided information, the results would be:
The maximum mortgage amount you can qualify for: $66,449
The house price you can afford: $74,449
Example 2
Let’s fill in the details:
- Your gross monthly income before taxes is $20,000.
- Your monthly expenses amount to $1,000.
- Your monthly debt totals $2,000.
- To find the total monthly expenses and debt, add $1,000 to $2,000, which equals $3,000.
- You’re willing to make a down payment of $15,000.
- You’re considering a loan term of 30 years.
- The interest rate for your loan is 7%.
After entering these details, the calculator will display the final amounts for the mortgage you can expect and the house prices you can afford.
Based on the provided information, here are the results:
- The maximum mortgage amount you can qualify for: $631,292
- The house price you can afford: $646,292
The 28/36% Rule
Your debt-to-income ratio (DTI) is a crucial measure that shows if you can manage repaying a loan by comparing how much you earn to your monthly debts. Different lenders have different DTI requirements, but typically they prefer to see a DTI of 43% or less. Ideally, your DTI should be around 36%, with 28% of your debt going towards your mortgage payment.
In simple terms, lenders prefer if no more than 28% of your income is spent on housing expenses and your total debts, including mortgage, credit card, and loan payments, don’t exceed 36% of your income. This guideline is often used to decide if you’re eligible for a loan and helps borrowers figure out if they can afford it.
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