Stated Income Mortgage!

Investment Property Mortgage Guidelines

• Income Documentation Not Required
• Income not stated on loan application
• DTI not calculated
• Credit underwritten based on LTV, FICO and Liquidity
• Primary Residence and Second Homes
• Asset Seasoning 30 Days
• Loan Amounts to $3 Million
• LTV up to 80% purchase/rate and term
• LTV up to 70% cash-out
• FICO beginning at 640
• Debt Consolidation considered the same as rate and term

Investment Property mortgages, sometimes referred to as low-doc, no-doc loans are all classified under the Non-QM umbrella. They were once a popular option for borrowers who had difficulty documenting their income. These loans have become less common in recent years due to regulatory changes, but it's still essential to understand how they work and their potential benefits and drawbacks. In this article, we'll explore the basics of stated income mortgages, their pros and cons, and their current status in the lending market.

Pros and Cons of No Documentation Mortgages

Pros:

• Easier approval for non-traditional borrowers: No Income Documentation mortgages can be a viable option for borrowers who cannot provide standard income documentation due to their unique employment or income circumstances.
• Faster application process: Since less documentation is required, the application process can be faster than for a traditional mortgage.

Cons:

• Higher interest rates: Due to the increased risk associated with these loans, lenders typically charge higher interest rates for no documentation mortgages compared to traditional mortgages.
• Larger down payment: The low down payment options offered on government-backed loans is not available.  Additionally, we require a larger down payment from borrowers to offset the increased risk of lending without full income documentation.
• Limited availability: In the wake of the 2008 financial crisis, Non-QM mortgages became less common, as regulators tightened lending standards to reduce the risk of mortgage defaults.

The Current Status of Non-QM Mortgages

Following the 2008 financial crisis, Non-QM mortgages fell out of favor due to their association with high default rates and the subsequent housing market collapse. Moreover, regulatory changes such as the Dodd-Frank Wall Street Reform and Consumer Protection Act. This Act led the way for more stringent lending standards, including the "ability-to-repay" rule, which requires lenders to verify a borrower's income, assets, and employment before extending a mortgage.

As a result, Non-QM mortgages have become far less common, and most lenders now require borrowers to provide detailed income documentation.