Maximizing Mortgage Options with Alt Doc Programs: Bank Statement, 1099 Only, and P&L Statement Only

Navigating the complexities of mortgage qualification can be a daunting task for self-employed individuals and those with non-traditional income streams. Traditional loan applications often rely heavily on tax returns and W-2 forms, which might not accurately represent the financial health of these borrowers. This is where Alternative Documentation (Alt Doc) programs come into play, providing flexible and practical solutions. Let's explore the three main Alt Doc programs: Bank Statement, 1099 Only, and Profit & Loss (P&L) Statement Only.

Bank Statement Program

Overview: The Bank Statement Program is designed for self-employed borrowers or those in the service and tip industries. Instead of traditional income documentation, lenders use the borrower's bank statements to determine income. This program is ideal for borrowers who have a significant amount of write-offs and deductions on their tax returns, which can lower their taxable income but do not reflect their true earnings.

How It Works:

• Documentation: Borrowers provide 12 to 24 months of personal or business bank statements.

• Income Calculation: The average monthly deposits over the specified period are used to determine income. Business account deposits may be considered if they are transferred to the personal account regularly.

Benefits:

• Allows for the inclusion of all deposits as income, excluding transfers between personal accounts.

• Suitable for self-employed individuals with fluctuating incomes.

• Avoids the need for extensive tax documentation.

1099 Only Program

Overview: The 1099 Only Program caters to independent contractors and gig economy workers who receive 1099 forms instead of W-2s. This program uses the income reported on the 1099 forms to qualify borrowers.

How It Works:

• Documentation: Borrowers need to provide their most recent 1099 forms, typically covering one or two years.

• Income Calculation: The total earnings reported on the 1099 forms are used as the income for mortgage qualification.

Benefits:

• Streamlined documentation process focused on 1099 forms.

• Simplifies the qualification process for independent contractors.

• No need for additional tax returns or W-2 forms.

P&L Statement Only Program

Overview: The P&L (Profit & Loss) Statement Only Program is tailored for self-employed borrowers who can provide a profit and loss statement prepared by a CPA or licensed tax preparer. This program offers a clear picture of the borrower's business income.

How It Works:

• Documentation: Borrowers submit a CPA-prepared profit and loss statement for the most recent year.

• Income Calculation: The P&L statement is used to determine the borrower's income, often supplemented by bank statements to verify deposits.

Benefits:

• Provides a comprehensive view of the borrower's business income.

• Allows for professional verification of income through a CPA.

• Useful for borrowers who might not have traditional income documentation.

Conclusion

Alt Doc Programs offer a lifeline to self-employed individuals and those with non-traditional income sources, enabling them to qualify for mortgages without the constraints of traditional documentation. Whether through bank statements, 1099 forms, or P&L statements, these programs provide flexibility and accessibility, helping more borrowers achieve their homeownership dreams.

For more information on how these programs can benefit you, contact us at 602-628-1231 or info@allapprovedhere.com. Our experienced mortgage professionals are ready to guide you through the process and find the best solution tailored to your unique financial situation.