Table of Contents
What Is Bank Statement Loan Calculator?
- A bank statement loan calculator is a financial tool designed to help individuals estimate their eligibility for a bank statement loan.
- This type of loan is specifically tailored for self-employed individuals or business owners with irregular income streams and may not have traditional income documentation, such as pay stubs or tax returns.
- The calculators take the input from the users, like their monthly income and expenses, their monthly debts, the down payment they are willing to pay, the tenure of their loan, and the interest they will pay against that loan.
- With the help of this information, the calculator gives the users an estimate of the mortgage they can expect and house prices they can afford.
Step-by-step Process Of Using A Bank Statement Loan Calculator
Using our calculator, you can determine the maximum mortgage you can get and the housing price you can afford in a few easy steps. Here is what you need to do:
Step 1: Fill in your gross monthly income
Your bank statement will have the details you might need to use this calculator. Find out your monthly income before taxes and enter it in the first box.
Step 2: Input your monthly expenses and monthly debts
Refer to the bank statement and enter the total of your monthly expenses and debt in the second box.
Step 3: Fill in the down payment details
Next, enter the down payment you are willing to make for a property in the third box.
Step 4: Determine the duration of your loan
Then, enter the loan term, for example, 20 years, 30 years, etc.
Step 5: Enter the interest rate you have agreed to pay
Enter the interest rate. For this, you can talk to a lender to know the exact interest rate for you.
Step 6: Get the expected mortgage amount and housing price you can afford
Finally, the last section of the calculator will automatically show the maximum mortgage amount you can get and the house price you can afford.
Example Of Bank Statement Mortgage Loan Calculation
Let us understand the workings of the calculator better with a few examples.
Example 1:
Let us determine the amounts that need to be filled in the boxes.
- Gross monthly income before taxes: $7000
- Monthly expenses: $600
- Monthly debt: $1500
- Total monthly expenses and debt= $600 + $1500, i.e., $2100
- The down payment you are willing to make: $8000
- Loan term: 30 years
- Interest rate: 6.5%
After entering all these details, the calculator will show the final amounts for the mortgage you can expect and the house prices you can afford.
For these figures, the answers would be:
- The maximum mortgage amount you can get: $66,449
- House price you can afford: $74,449
Example 2:
Let us determine the amounts that need to be filled in the boxes.
- Gross monthly income before taxes: $20,000
- Monthly expenses: $1000
- Monthly debt: $2,000
- Total monthly expenses and debt= $1000 + $2000, i.e., $3000
- The down payment you are willing to make: $15,000
- Loan term: 30 years
- Interest rate: 7%
After entering all these details, the calculator will show the final amounts for the mortgage you can expect and the house prices you can afford.
For these figures, the answers would be:
- The maximum mortgage amount you can get: $6,31,292
- House price you can afford: $6,46,292
Understanding The 28/36 Rule For House Affordability
- Financial advisors recommend following the 28/36 rule for managing housing expenses and total debt.
- The rule suggests spending a maximum of 28% of gross monthly income on home expenses and 36% on total debt.
- The rule serves as a guideline for determining affordable monthly payments.
Let us understand the 28/36 rule better with an example.
28/36 rule illustrated in an example:
- Suppose you have a monthly income of $5,000.
- According to the rule, your housing expenses should not exceed $1,400 (28% of $5,000), and your total debt payments should not be more than $1,800 (36% of $5,000).
- After deducting these amounts, you can allocate the remaining funds for essential expenses such as groceries and transportation, discretionary spending like entertainment and dining out, and savings goals such as investing or saving for a down payment on a property.
- Adhering to the 28/36 rule helps establish a reasonable budget and promotes financial stability.
Conclusion
Finding out the expected mortgage amount and house prices you can afford will become a piece of cake with this bank statement loan calculator! We hope this article helped you understand how this calculator works and how to make the most of it. Keep this calculator handy for sound financial and investment planning.
FAQs
-
How is a bank statement loan calculated?
Bank statement loans are calculated using the average monthly deposits shown on bank statements over 12-24 months. Loan amounts are typically based on a percentage (50-75%) of the average monthly deposits, with consideration for credit score and debt-to-income ratio.
-
How much money do I need for a bank statement loan?
The required amount of money for a bank statement loan depends on the lender’s criteria. Typically, you need to show sufficient average monthly deposits on your bank statements. The loan amount is based on a percentage of those deposits, usually 50% to 75%. Consult with lenders for specifics.
-
How hard is it to get a bank statement loan?
Obtaining a bank statement loan can vary in difficulty. It depends on individual circumstances and lender criteria. Meeting deposit and credit score requirements, having a stable income, and having an excellent financial history increase the chances of approval. Professional guidance can help navigate the process.
-
How is income calculated for bank statement mortgage?
For a bank statement mortgage, income is typically calculated by reviewing the average monthly deposits on bank statements over a specified period. Lenders assess the stability and consistency of these deposits to determine the borrower’s income eligibility. Additional factors such as the nature of the deposits (e.g., employment income, self-employment income, rental income) and the applicant’s overall financial picture may also be considered.
-
What is the purpose of using a bank statement loan calculator?
The primary purpose of using a bank statement loan calculator is to provide borrowers with an idea of their loan eligibility and potential loan amount. It allows individuals who may not have traditional income documentation, such as tax returns or pay stubs, to assess their borrowing capacity based on their bank statements.
-
Can a bank statement loan calculator be used for any type of loan?
Bank statement loan calculators are primarily designed for specific types of loans, such as bank statement mortgages or loans for self-employed individuals. These loans often require alternative income documentation, and the calculator helps estimate loan amounts in such cases.
-
Are the results from a bank statement loan calculator accurate?
The bank statement loan calculator results provide estimates and should be used as a guide rather than definitive figures. The actual loan amount offered will depend on various factors, including the lender’s criteria, creditworthiness, and other financial considerations.
-
Where can I find a bank statement loan calculator?
Bank statement loan calculators are available on various websites, including lender websites, mortgage-related platforms, and loan comparison websites. HomeAbroad is one of the trusted websites that provides an easy-to-use bank statement loan calculator.
