Lite Doc and Reduced Doc Options
Lite Doc – 12-Month Income Documentation
Our alt doc mortgage loan program includes a Lite Doc option designed for borrowers who prefer simplified income documentation. This program allows qualification with just the previous 12 months of income records, offering two convenient paths: One year of W-2 forms paired with 30 days of paycheck stubs, or one year of tax returns combined with a year-to-date profit and loss statement (using the 4506-C form). This flexible approach is ideal for those who need a streamlined process to secure financing.
Reduced Doc – 12-Month Employment Documentation
As an alternative to the standard two years of income documentation, you have two options: either provide one-year W2 alongside 30 days of paycheck stubs year to date (YTD) or submit one year tax returns along with a year-to-date Profit and Loss (P&L) statement.
Employment History:
A stable employment history is usually required, with at least two years in the same industry or job.
One Year Verification of Employment | VOE:
Our alternative documentation mortgage loan program offers a Reduced Doc option, a process for verifying employment for the previous 12 months for borrowers who prefer an easy and clean mortgage approval.
Wage Earner Verification of Employment Options:
* * Written Verification of Employment / WVOE signed by the owner or direct supervisor.
* * Verbal Verification of Employment / VVOE
For wage earners, the program allows for various Verification of Employment (VOE) options. Borrowers can submit a Written Verification of Employment (WVOE) signed by the owner or direct supervisor, or opt for a Verbal Verification of Employment (VVOE), making the process flexible and accommodating.
Eligible Self-Employment Verification of Employment Options:
* Operating Agreement
* K1
* “CPA Letter” Provided by a Tax Professional such as a CPA, EA, etc.
* Internet Listing
You can provide an Operating Agreement, a “CPA Letter” from a tax professional such as a CPA or EA, or even an Internet Listing that confirms the existence and operation of their business. These options offer the flexibility needed for self-employed individuals to qualify for a mortgage.
Income Documentation and DTI:
* One year of W-2 forms plus 30 days of recent paycheck stubs, or
* One year of tax returns along with a year-to-date Profit and Loss (P&L) statement.
Debt-to-Income (DTI) Ratio:
* Lenders assess the borrower’s DTI ratio, with lower ratios improving eligibility.
Credit Requirements
Lenders typically require a minimum credit score between 600 and 680, depending on the program and borrower profile. A score of 620 is often the baseline for qualification, while applicants with a 640 score may qualify for higher debt-to-income ratios—up to 55% DTI in some cases.
Three open, active tradelines with at least a one-year history, or two tradelines with a minimum of two years’ history. Meeting these standards helps demonstrate financial stability and strengthens eligibility for competitive mortgage options.
* Major Derogatory Credit Requires Only 2 Years Seasoning
* Housing Payment History 1 30-Day Mortgage or Rent
Loan-to-Value (LTV) Ratio:
LTV ratios depend on the loan amount, property type, and borrower profile. Typically, higher
LTVs are available for borrowers with better credit scores and lower debt-to-income ratios.
Eligible Property Types:
* The program may be available for various property types, including primary residences, second homes, and investment properties.
Residency Status:
* Available to U.S. citizens, permanent residents, and, in some cases, foreign nationals with valid documentation.
Available Terms:
* 40 Year Fixed – with or without 10-Year Interest Only
* 30 Year Fixed – with or without 10-Year Interest Only
* ARMs – 5/1,7/1, 10/1
Available in the Following States:
Alabama, Arizona, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Illinois, Maine, Maryland, Massachusetts, Nevada, New Jersey, North Carolina, Oregon, Pennsylvania, Tennessee, Texas, Virginia, and Washington.