Alternative Mortgage Programs

Alternative Mortgage Programs

Over the past year or so, some new, alternative mortgage programs have been developed in order to meet the needs of borrowers with unique circumstances/needs.  Generally, these programs require 20% down and require credit scores of 620 or above.

Bank Statement Program:  This program has been developed to assist self-employed borrowers in qualifying for a mortgage by utilizing an average of business deposits for income qualifying rather than using information on their personal and business federal income tax returns.  Typically, a 12 or 24 month average is used to make the income determination for qualifying.  A 50% expense ratio is used; therefore, that average is then divided by 2 in order to determine qualifying income.  The Lender determines which deposits are considered to be “business deposits” when making this calculation.

1099-only Program:  This program has also been developed to assist self-employed borrowers in qualifying for a mortgage by using 75% of 1099-MISC income received and then averaged over a 2 yr. period.

DSCR Program:  DSCR stands for Debt Service Coverage Ratio.  This program is used for residential investment property transactions and the Debt Service Coverage Ratio* must generally be at or over 1.00.  Only income used for qualifying is that generated from the rent produced from the investment property.  This can be used for up to a 4 unit property where all units are residential use.  Minimum loan amount is $150000.  Borrower must have at least 12 mos of landlord/property management experience in the past 3 yrs.

No Ratio Program:  This program is used for residential investment property transactions only.  It requires no debt ratio calculation be made of any kind.

*Debt Service equals the PITI payment for the new mortgage.

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