Jumbo Florida Bank Statement Mortgage Lenders

Option 1 (Expense Ratio using bank statements)

➢ Percentage of gross deposits (twelve (12) or twenty-four (24 months) using expense ratio factor
based on business type and number of employees.
➢ Qualifying income will be the lower of the Expense Ratio formula or the monthly income disclosed
on the initial signed URLA.
➢ Expense ratio should be reasonable for the profession.
➢ Qualifying income should be multiplied by the Borrower’s documented business ownership.
➢ If a Borrower has declining income and is qualifying with twenty-four (24) months of business
bank statements, the last twelve (12) months of income will be utilized to qualify.
➢ Example: Borrower with $25,000 monthly average deposits multiplied by a 50% expense factor =
$12.5k in qualifying income.

Option 2 (3rd Party Profit & Loss Statement)

➢ Qualifying income is the lower of the Profit & Loss (“P&L”) net income from the validated third-party prepared P&L or monthly income disclosed on the initial signed URLA
➢ Businesses qualifying with a P&L statement showing less than a 15% expense ratio will be limited to a 15% ratio. The expense ratio should be reasonable for the profession
➢ Borrower-prepared P&L will not be permitted under any circumstances
➢ Business Bank Statements are used to validate third-party prepared P&L. Gross revenue listed on P&L must be within +/-10% of the total qualified deposits
➢ If a Borrower has declining income and is qualifying with twenty-four (24) months of business bank statements, the last twelve (12) months of income will be utilized to qualify
➢ The following documentation is required:

Option 3 (3rd Party Expense Ratio)

➢ Qualifying income is the lower of the 3rd Party Prepared Expense Ratio net income or the monthly income disclosed on the initial URLA
➢ To determine net income, multiply eligible business deposits by the following: (100% minus the Expense Ratio)/ 12 or 24 months.
➢ 3rd Party Prepared Expense Ratio floored at 15%
➢ If a Borrower has declining income and is qualifying with twenty-four (24) months of business bank statements, the last twelve (12) months of income will be utilized to qualify
➢ The Expense Statement must be prepared and signed by a third-party Tax Professional specifying business expense as a percentage of the gross annual sales/revenue
➢ Self-employed Borrowers who have filed their business tax returns are ineligible
➢ The following documentation is required:
▪ Twelve (12) or twenty-four (24) months of complete business bank statements from the same account (transaction history printouts are not acceptable)
▪ Business bank accounts, personal bank accounts addressed to a DBA, or personal accounts with evidence of business expenses can be used for qualification
▪ Tax Professionals must attest that they have audited the business’s financial statements or reviewed working papers provided by the Borrower
▪The  Tax Professional must certify that the Expense Statement represents an accurate summary of the applicable cash expenses of the business
▪ Tax Professionals must attest that they are not related to the Borrower or associated with the Borrower’s business
▪ Tax Professional must have filed the Borrower’s most recent two (2) years’ business tax returns
▪The  Tax Professional license must be verified and signed

Guidelines For Bank Statement Mortgage Lenders

Bank Statement loans submitted with tax returns or tax transcripts must follow Full Documentation guidelines.
➢ Any loan file using qualifying income from Bank Statements with evidence of tax returns or tax transcripts in the origination file will be ineligible.
➢ Borrowers who are using more than three (3) businesses to qualify must use the Personal Bank Statement option.

Documentation Requirements:

✓ Twelve (12) or twenty-four (24) months of consecutive bank statements are required.
✓ Any loan submitted with less than twelve (12) months of consecutive bank statements will not be eligible.
✓ Business Narrative
o Borrower must provide a business narrative which includes details relating to the size/score and operating profile of the business, including the following:
▪ Description of Business / Business Profile
▪ Location and Associated Rent
▪ Number of Employees / Contractors
▪ Estimated Cost of Goods Sold, if any
▪ Materials / Trucks / Equipment
▪ Commercial or Retail Client Base
✓ An internet search of the business is required, with documentation to be included in the credit file to support the Business Narrative. Underwriter certification (or notation on the 1008) if there are no returns when attempting an Internet search
✓ Verification of business existence and that the business is fully operational/active is required within ten (10) calendar days of closing
✓ Multiple bank accounts may be used
✓ Co-mingling
o Co-mingling of personal and business accounts is not permitted in personal bank accounts. Evidence of comingling will require the loan to be submitted/qualified as a business bank statement loan
o Two (2) months of business bank statements must be provided to validate Borrower utilizes separate banking accounts
o Bank statements must be the most recently available at the time of application and must be consecutive

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. Unusually large deposits exceeding 50% of monthly income (as defined by Fannie Mae) into bank accounts must be explained via LOE and must be consistent with the business profile. If LOE is sufficient, no sourcing required.
Two (2) months of business bank statements are required. These statements should evidence activity to support business operations and reflect transfers to the personal account. o A borrower who only utilizes a personal account for business activity and does not have an associated business account is eligible to qualify through Section 8.4.2 (Business Bank Statements)
o Co-mingling of personal and business receipts is not permitted. If the 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. Declining income may require a letter of explanation.

Bank Statement Mortgage Qualifying Requirements

✓ Validation of a minimum of two (2) years of existence of the business from one of the following: Business License, Letter from Tax Preparer, Secretary of State Filing, or equivalent
✓ Ownership percentage must not be less than 25% and documented via a CPA letter, Operating Agreement, or equivalent
✓ Borrowers who own more than three (3) businesses must use the personal bank statement option

 Qualifying Income

For personal bank statement documentation, it is the lower of the following:
o Personal bank statement average (total eligible deposits / 12 or 24 months)
o If a Borrower has declining income and is qualifying with twenty-four (24) months of bank statements, the last twelve (12) months of income will be utilized to qualify
o Monthly income disclosed on the initial signed URLA. Transfers from other bank accounts into the business bank accounts will require conclusive evidence that the source of the transfer is business-related income. Large deposits exceeding 50% of monthly income (as defined by Fannie Mae) into bank accounts must be explained via LOE and must be consistent with the business profile. If LOE is sufficient, no sourcing is required.

Declining income may require an LOE.

NSFs may require a Borrower LOE documenting that they are not due to financial mishandling or insufficient income. A maximum of 3 NSF occurrences within twelve months are allowed. If there are zero occurrences in the most recent three-month period, up to 6 occurrences in the most recent twelve-month period are acceptable. NSFs should be covered with deposits shortly after they are incurred. 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.

Business Requirements

✓ Validation of a minimum of two (2) years existence of the business from one of the following: Business License, Letter from Tax Preparer, Secretary of State Filing, or equivalent
✓ Ownership percentage must be documented via a CPA letter, Operating Agreement, or equivalent
✓ Minimum 50% business ownership required
✓ Borrowers utilizing business bank statements that own > 50% but < 100% of a business will be qualified at the net income multiplied by their ownership percentage