ITIN Bank Statement Purchase

The Bank Statement Loan Program is an excellent solution for self-employed ITIN Buyers (and US Citizen Buyers) as it allows you to qualify based on the income shown via a 12 to 24 month deposit history from your personal or business bank accounts. Your business or personal tax returns are not required. However, you will need to verify a 2 year history of being self-employed in the same business. The following documentation is required:

Letter from a CPA stating your business has been existence for at least the last 2 years on CPA Letterhead
Your business and CPA will be independently verified (via LexisNexis, D&B International Business Search, or other means of verification)
2 years existence can be validated by a Business License, or Secretary of State Filing

Once your income is calculated from your bank statements your monthly debt will then be calculated in order to determine your debt to income ratio ("dti"). The debt to income ratio cannot be higher than 50 in most cases and is determined by taking your current monthly debt PLUS your proposed mortgage payment and dividing it by your monthly income. (Monthly Debt/Monthly Income = Debt To Income Ratio) The proposed mortgage payment number will include Principal, Interest, Property Taxes, Homeowner's Insurance and any Condominium/Association fees. ("PITIA")

Bank statements should meet the following requirements:

All parties listed on each bank account must be included as borrowers on the loan
Statements must be consecutive, and the most recent statement must be dated within 90 days of closing.
Statements should support stable and generally consistent deposits. Unusual deposits or inconsistent deposit history must be explained and documented.
Up to 25 NSF checks and overdraft protection transfers in the most recent 12-month period are allowed with explanation from the borrower.
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.
The lower of the 12- month average or the last 6 month’s average will be used to determine monthly bank statement income.

Below we will take a look at the required documentation necessary to satisfy the criteria of an ITIN Bank Statement Program. First let's start with some characteristics that are common to ITIN Buyer Programs:

ELIGIBLE PROPERTY TYPES

1 Unit Properties
2-4 Unit Properties (One unit must be occupied by the Buyer as their primary residence.)
Condominiums (Both warrantable and non-warrantable)
Townhouses/Planned Unit Developments

MINIMUM DOWN PAYMENT

Your minimum down payment will depend on your credit score as follows:

740 or above = 20% down
720 - 739 = 25% down
700 - 719 = 30% down
680 - 699 = 35% down

ELIGIBLE PARTIES

All parties (borrowers, banks and property sellers) involved on the transaction must be screened through exclusionary lists, and must be cleared through OFAC's SDN list.
Borrowers from OFAC sanctioned countries including Russia and Belarus are ineligible. Access the link below for a list of sanctioned countries: http://www.treasury.gov/resource-center/sanctions/Programs/Pages/Programs.aspx
Individuals with diplomatic immunity are not eligible.

CLOSING REQUIREMENTS

Any loan made to a Foreign National must have an ACH agreement signed at the closing table. The ACH account must be set to draw from a US bank account. The Borrower shall provide proof that a US bank account is opened in their name (or in the name of the LLC which owns the property, if applicable) and that the account is funded with the first month’s payment.

DOCUMENTS

All documentation provided that has or will be translated to English must have a Certified Translator Stamp
Documents signed outside of the United States must be notarized by a U.S. embassy or consular official. The certificate of acknowledgment must meet the standard notarial requirements and must include the embassy or consular seal.

Bank Statement - Required Documentation

Proof Of Status

1 Unexpired Government Issued Photo ID (Driver's License)
A copy of your ITIN Card; OR
A Letter from the IRS stating you have been assigned an ITIN
Buyer must be OFAC compliant

Business Bank Statement Income

Business Bank Statements can be used to calculate your monthly income. Generally, 70% to 30% of your business account deposits over a 12 to 24 month period will be used to calculate your monthly income. The exact percentage used will be determined on a case by case basis and will largely depend on the type of business you own.

The most common standard is to use 50% unless your CPA can state that your actual expenses are less via an expense statement prepared and signed by the CPA. The expense statement must meet the following criteria:

The CPA must attest that they have filed the most recent 2 years business tax returns, are not related to the borrower, and are not associated with the borrower’s business.
The CPA must confirm the borrower’s ownership percentage.

The following requirements apply for all business bank statement transactions:

A minimum of 25% ownership in the business is required; however, borrowers with less than 50% ownership that are not a managing member are ineligible for business bank statement qualification.
Declining income will require a Letter Of Explanation.
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.

Personal Bank Statement Income

Personal Bank Statements can be used instead of business bank statements. 100% of the deposits averaged over a 12 or 24 month period can be used to calculate income under the following guidelines:

12, or 24 months complete personal bank statements from the same account (transaction history printouts are not acceptable).
Minimum 25% business ownership is required.
No more than 3 separate 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.
All deposits greater than 50% of the monthly deposit average will require a source and explanation.
Transfers between personal accounts may be excluded.
Transfers from a business account into a personal account are acceptable. 3 months of recent business bank statements will be required to establish a history of transfers.

CPA Prepared Profit & Loss

Personal Bank Statement Income

You can also use Business Bank Statements in combination with a Profit & Loss Statement prepared by your CPA which states your net income over a 12 or 24 month period. You will still submit 12 or 24 months of business bank statements but they will only be used to validate the Profit & Loss Statement. The following documentation is required:

12 or 24-months complete business bank statements from the same account (transaction history printouts are not acceptable). No more than 3 different business accounts may be used.
Personal bank accounts addressed to a DBA, or personal accounts with evidence of business expenses must be treated as business accounts for qualification.
The P&L statement must cover the same time period as the bank statements provided.
P&L must be signed by the CPA
CPA must review the business financial statements or working papers provided by the borrower.
The CPA may not be related to the borrower or associated with the borrower’s business.
The Gross revenue listed on the P&L Must be within 10% +/- of the total qualified deposits.

Loan Terms and Reserves

CPA Prepared Profit & Loss

Loan Terms and Reserves

30 year fixed rate mortgage with no prepayment penalties
40 year fixed rate mortgage with no prepayment penalties
Adjustable Rate mortgage with no prepayment penalties

RESERVES

In addition to the down payment and closing costs, the Buyer will have to show they have enough funds in their account(s) to cover 3 months of mortgage payments including principal, interest, property taxes, homeowners insurance, and association/condo fees (if applicable).
6 months of mortgage payments including principal, interest, property taxes, homeowners insurance, and association/condo fees (if applicable). will be required for loan amounts over 1 million US dollars.

Credit Requirements

CPA Prepared Profit & Loss

Loan Terms and Reserves

A 36 month history of using credit in the U.S. with 3 tradelines that have been reporting payments/usage for 12+ months and have been active some time in the last 12 months; OR
2 tradelines that have been reporting payments/usage for 24+ months with some activity in the past 12 months.
A tradeline is typically a credit card, personal loan, or car loan. But some lenders will allow you to use other accounts as tradelines such as cable, utility, or cellphone accounts.
If a complete credit history is not available the ITIN Buyer may be able to supplement their credit history by providing a history of paying rent on time. This can be provided via a verification from the landlord or through other sources.
A credit score of at least 680 is required for most lenders.
Borrowed Social Security Numbers are not allowed.