Self Employed, 1099, Business Owners, W-2, Retired, Investors & Not Employed Borrowers
A Self-Employed mortgage, or a Non QM (non qualified mortgage) home loan, is a type of mortgage specifically designed for self-employed individuals who have difficulty meeting the traditional income verification requirements of a conventional mortgage. This loan product allows self-employed borrowers to qualify for a home loan based on their gross revenue through bank statement deposits, a 1099 statement, a CPA letter or a P & L statement. In almost all cases, no W-2's or tax returns are required for income qualification! For more details on our bank statement qualifier scroll down to "How do bank statement loans work"?
If your situation doesn't fit into a self-employed status we can offer a loan that omits income and employment verification all together. This is NOT the old stated income or "liar loan" from the early 2000s. In fact, this loan product is endorsed by the US Department Of Treasury as a way to provide opportunities for underserved communities and underserved borrowers that might not otherwise fit into other traditional loan programs, but that are more than capable of meeting their obligations. Think of this loan as a return to common sense underwriting! With our product you will not disclose any income or employment on the application so there is no misrepresentation on your part or ours.
This loan is a great solution for just about everyone. We have used this loan to avoid problems for borrowers such as newly self-employed, retired, seasonal workers, owners of cash businesses, transitioning from health or life events, recent immigration, disqualified income, recently divorced, in between jobs and many other similar scenarios with income or employment challenges.
An asset depletion mortgage, also known as an asset-based loan, is a type of mortgage program that allows borrowers to use their liquid assets to qualify for a loan, even if their traditional income may not meet the lenders requirements. It is typically utilized by borrowers who have substantial assets but limited or irregular income streams.
How it works - instead of relying on income to determine loan eligibility, we can consider the borrower's liquid asset accounts such as checking, savings, investment portfolios, retirement funds and other eligible type accounts. We can calculate an "income" figure based on the borrower's liquid asset total through use of a depletion rate calculation. In a sense, we turn your liquidity into a monthly income cash flow. You don't hand over control of any of your assets and what you do with your accounts is only managed by you. Nothing changes with the accounts.
Asset Depletion mortgages can be advantageous for borrowers who have substantial assets but limited or non traditional income sources. It allows them to convert those assets, mathamatticaley speaking, into a qualifying income. We also can offer an "asset only" loan which evaluates your debt and the size of the loan and looks for a liquid asset total that cover the loan amount size and monthly debts. Asset qualifiers are a bit tricky to fully grasp but we are available to explain in more detail with a chat.
Here's how a bank statement loan typically works for the self-employed, 1099 borrower & business owner:
Income verification: Instead of providing W-2's and tax returns, the self-employed borrower will provide their business or personal bank statements for a specific period of time, usually 12 or 24 months. The lender reviews the deposits found in the bank statements to assess the borrowers gross income. The gross income is determined by an average over the most recent 12 or 24 months. Some bank statement loan options offer a lower rate when using 24 months.
Business Expense Factor: Next, the lender will determine a business expense factor based on the type of business, product or service offered & the number of employees the business has. If the borrower disagrees with the generic expense factor determined by the lender's criteria, the borrower can provide a CPA letter confirming the actual expense factor and that will be accepted. In most cases, the standard lender EF will allow for enough income to qualify, but the CPA letter option is always available. Most expense factors will range from 10% to 50% making this option much more attractive for a self employed borrower compared to a bottom line taxable income found on their tax return.
The monthly income that is shown on the application and used to qualify will be the average monthly income less the determined expense factor. We are able to complete the income calculation and underwriter verification during our formal pre approval process which takes 24-48 hours from time of application.
The most popular form of mortgage for the purchase or refinance of rental real estate is the DSCR product. The DSCR mortgage refers to a mortgage that is evaluated and underwritten based on the Debt Service Coverage Ratio. The borrowers income or employment is NOT evaluated and generally it is left off the application all together.
The DSCR is a financial metric used by lenders to assess the property's ability to generate sufficient rental income to cover the debt obligations generated by the rental property itself. Other borrower obligations are not factored in the approval process making this loan product a favorite for investors who own, or want to own, multiple investment properties.
DSCR products typically have a minimum DSCR factor of 1:1.0 or 1:1.25, but recently we have added No DSCR required options that don't require any coverage percentage at all. The stronger the coverage ratio is however, the better the terms of the loan will be. But, an investor with a larger down payment and good credit can purchase an investment property with no DSCR coverage and no income or employment verified. Fast approval's and fast closings!
A Bridge Or Hard Money mortgage is a type of short-term loan that is commonly used in real estate transactions when there is a need for quick financing or when traditional lending options are not available or feasible.
Bridge loans are typically utilized when there is a time gap between the purchase of a new property and the sale of an existing property. These loans "bridge" the gap by providing immediate funds.
Hard Money loans, on the other hand, are loans that re secured by the value of the real estate being purchase d or used as collateral. These loans are typically provided by private lenders or investors, but thery are also avaialable from institutional lenders. Hard money loans are often sought by borrowers who may not qualify for a traditional loan due to credit history, income documentation or other financial limitations. We can offer you options for both Bridge Loans & Hard Money should that be your best solution.
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