95% LTV Bank Statement Loan Program

This bank statement mortgage program is designed for self-employed borrowers who qualify using bank statement cash flow instead of traditional tax-return income documentation. Under the 95% LTV program structure provided, eligible borrowers may finance up to 95% of the property value, with the remaining 5% down payment permitted from eligible gift funds.

The attached Non-QM matrix supports bank statement qualification using 12 or 24 months of business bank statements, or 12 or 24 months of personal bank statements accompanied by two months of business bank statements. The matrix also permits gift funds for down payment and closing costs with no minimum borrower contribution, subject to full guideline requirements.

95% LTV Bank Statement Non-QM Mortgage Loan

Eligible borrowers may use 5% gift funds toward the down payment under this 95% LTV program structure. Gift funds must satisfy the applicable documentation, proof-of-funds, and evidence-of-receipt requirements.

The attached matrix states that gift funds may be used for down payment and closing costs and that no minimum borrower contribution is required. The matrix itself shows bank statement LTV tiers up to 90% for owner-occupied and second-home transactions; therefore, the 95% LTV feature should be treated as a separate program-level feature or overlay rather than an LTV tier expressly shown in the attached matrix.

Bank Statement Income Documentation

Bank statement income documentation is available for self-employed borrowers. Acceptable documentation shown in the matrix includes:

12 or 24 months of business bank statements, or
12 or 24 months of personal bank statements with two months of business bank statements.

Qualifying income is determined from eligible deposits after applying the applicable business expense factor. The matrix identifies three primary qualification methods for business bank statements: a 50% expense ratio, a reasonable CPA-supported expense ratio, or a third-party Profit and Loss statement.

Business Bank Statement Expense Factor

The standard business bank statement calculation uses a 50% expense ratio. Eligible business deposits are analyzed over the applicable statement period and reduced by the expense factor to determine qualifying income.

If the bank statement analysis indicates that actual business expenses are higher, underwriting may apply an expense factor greater than 50%.

Reduced Expense Factor Below 70%

A business expense factor below 50% may be considered when the business operates with lower-than-standard expenses and acceptable third-party documentation supports the reduced ratio.

A CPA, CTEC, or EA may provide a written expense-ratio statement identifying the actual business expense percentage. The stated ratio should include cost of goods sold and other business expenses and must be reasonable for the type of business.

CPA, CTEC, EA, and PTIN Documentation

Expense-ratio documentation may be prepared by a CPA, CTEC, or EA. A preparer with a PTIN may also be acceptable when documented as an employee of a third-party tax preparation service, subject to the full underwriting guidelines.

Profit and Loss Statement Option

A CPA-, CTEC-, or EA-prepared Profit and Loss statement may be used to establish the business expense factor when it covers the same 12- or 24-month period as the bank statements.

The preparer must acknowledge in writing that they prepared or reviewed the P&L. The expense factor reflected in the P&L must be reasonable and acceptable to underwriting.

Credit Score and Bank Statement LTV Matrix

For owner-occupied and second-home bank statement transactions, the attached matrix provides the following maximum purchase and rate-and-term LTV tiers:

700+ FICO: up to 95% LTV (5% gift funds)
680+ FICO: up to 90% LTV
660+ FICO: up to 85% LTV
640+ FICO: up to 80% LTV
620+ FICO: up to 70% LTV

Cash-out LTVs under the same bank statement matrix range from 65% to 80%, depending on credit score and loan amount. Final eligibility is also subject to occupancy, property type, housing history, credit events, tradelines, reserves, appraisal requirements, and other program overlays.

Loan Amounts

The attached matrix provides loan amounts beginning at $100,000 and extending to $4,000,000, subject to the applicable FICO, LTV, occupancy, and transaction type.

At the highest loan amount tier shown, loans up to $4,000,000 require a 720+ FICO and are limited to 70% LTV for purchase/rate-term refinance and 50% LTV for cash-out refinance.

Debt-to-Income Ratio

The standard maximum debt-to-income ratio is 50%.

DTI may be considered up to 55% with additional restrictions, including:

Minimum 680 FICO
Maximum $1.5 million loan amount
Three additional months of reserves
Maximum 80% LTV for owner-occupied properties
Maximum 70% LTV for second homes
Maximum 75% LTV for non-owner-occupied properties
40-year terms not eligible at the higher DTI tier

Reserve Requirements

Reserve requirements are based on loan amount:

Loan amounts up to $1 million: 6 months reserves
Loan amounts over $1 million through $2 million: 9 months reserves
Loan amounts over $2 million: 12 months reserves

The matrix also provides a three-month reserve reduction with a 5% LTV reduction. For qualifying rate-and-term refinances, no reserves may be permitted at a maximum 65% LTV. Assets and reserves require 30 days seasoning, and cash-out proceeds may be used to satisfy reserve requirements.

Fixed-Rate, ARM, and Interest-Only Options

Available loan structures shown in the matrix include:

15-, 30-, and 40-year fixed-rate terms
30- and 40-year interest-only loans with a 10-year interest-only period
5/6 ARM
7/6 ARM
5/6 and 7/6 interest-only ARM options with a 10-year interest-only period

Interest-only financing is permitted up to 90% LTV for owner-occupied properties and 80% LTV for non-owner-occupied properties under the general matrix parameters.

Housing History Requirements

Housing history can affect the maximum available LTV:

1 x 30 in the most recent 12 months: no LTV adjustment
0 x 60 in the most recent 12 months: reduce maximum LTV by 5%
0 x 90 in the most recent 12 months: reduce maximum LTV by 20%; owner-occupied cash-out and non-owner-occupied transactions are not allowed under this tier

Borrowers with no mortgage or rental history are generally limited to the lower of the matrix LTV or 80% LTV, with a maximum 50% DTI.

Credit Events

Foreclosure, short sale, deed-in-lieu, and bankruptcy may be eligible after the applicable seasoning period.

Foreclosure, Short Sale, or Deed-in-Lieu

36 months or more: no LTV adjustment
24 to 35 months: reduce maximum LTV by 5%
12 to 23 months: reduce maximum LTV by 15% and cash-out is not allowed

Chapter 7 or Chapter 13 Bankruptcy

36 months or more: no LTV adjustment
24 to 35 months: reduce maximum LTV by 5%
12 to 23 months: reduce maximum LTV by 5% and cash-out is not allowed

Tradeline Requirements

The standard minimum tradeline requirement is either:

Two tradelines reporting for 24 months with activity during the most recent 12 months, or
Three tradelines reporting for 12 months with recent activity.

The minimum tradeline requirement is waived when the primary borrower has three credit scores. Limited tradelines are generally capped at 80% LTV for purchase and rate-and-term refinance, 70% LTV for cash-out, and 45% DTI.

Eligible Property Types

Eligible property types shown in the matrix include:

Condominiums
Non-warrantable condominiums
Condotels
2-4 unit properties
Modular homes
Rural properties

Property-specific LTV limits apply. For owner-occupied transactions, the matrix shows purchase/rate-term limits up to 90% for condominiums, 85% for non-warrantable condos, condotels, 2-4 units, and modular homes, and 90% for rural properties. Cash-out limits are lower.

Second homes are limited to a maximum 85% LTV under the general guideline parameters.

Appraisal Requirements

For loan amounts up to $2 million, the matrix requires one appraisal plus an AVM or a Collateral Underwriter score of 2.5 or less.

Loan amounts above $2 million require two appraisals. Properties located in declining markets require a 5% LTV reduction, and collateral condition must generally be C4 or better; C5 and C6 properties are ineligible.

First-Time Homebuyer Guidelines

For owner-occupied and second-home transactions, a first-time homebuyer with rental history may be eligible with a minimum 640 FICO and a 0x30 rental rating.

For a first-time homebuyer without rental history, the matrix permits Full Doc, Bank Statement, and 1099 documentation subject to additional restrictions. Under this specific exception, gift funds are not allowed. The matrix shows:

80% LTV: minimum 680 FICO, maximum $1.5 million loan amount
75% LTV: minimum 660 FICO, maximum $1 million loan amount
70% LTV: minimum 640 FICO, maximum $1 million loan amount

Maximum DTI is 50%, and non-occupant co-borrowers are not allowed under this exception.

Additional Program Guidelines

Minimum loan amount: $100,000
Maximum loan amount shown: $4,000,000
Cash-out limit: Unlimited, subject to maximum LTV restrictions
Maximum acreage: 20 acres
Subordinate financing: Allowed; maximum CLTV equals maximum LTV
Impounds: Required on HPML loans and loans above 80% LTV
Non-arm’s-length cash-out refinance: Not allowed
Primary wage earner FICO: Allowed, subject to guidelines
Ineligible states shown in the matrix: New York, Hawaii, Massachusetts, Missouri, and Virginia