Overview & Underwriting Philosophy
Summary: Focus on income stability, employment history, credit depth, assets, and collateral
- Common-sense, manual underwriting with emphasis on Ability-to-Repay (ATR).
- Loans must be ATR compliant unless business-purpose.
- AUS Findings must show Refer / Approve-Ineligible, or use an Alternate Loan Review Form.
Programs & Products
Summary of available documentation types:
- Full Doc (1 or 2 Years) – Standard FNMA documentation
- Bank Statements – 12 or 24 months
- 1099 Only – 1 or 2 years with paystub
- P&L Only – 12 months, CPA/CTEC/EA prepared
- WVOE – FNMA 1005 + 2 months bank statements
- Asset Depletion – 6 months statements
- DSCR – Investment properties only
Eligible Product Terms:
- Fixed: 15, 30, 40-year
- ARM: 5/6 SOFR, 7/6 SOFR
- Interest Only options available (10-year IO)
Key Limits (matrix-driven):
- Max LTV, CLTV, Loan Amounts, and Minimum FICO vary by matrix.
- IO has LTV and DTI limits.
Property Eligibility
Eligible:
- SFR, PUD, Townhomes, Condos
- 2–4 units
- 1 legal ADU allowed on SFR
- Max 20 acres (case-by-case >20)
Ineligible:
- Manufactured/mobile, co-ops, houseboats
- Hobby farms, working farms, orchards
- Properties in NY (not allowed)
- Certain states restricted for OO / 2nd / consumer-purpose investor
Appraisal Requirements:
- 1 appraisal ≤ $2M
- 2 appraisals > $2M
- C5/C6 or Q6 not allowed unless repaired
Condos:
- Warrantable & Non-warrantable allowed
- Condotel allowed with restrictions (full kitchen, 500+ sq ft, no hotel branding)
Transaction Types
Purchase – LTV based on lower of sales price or value
Rate/Term Refinance:
- Payoff first & seasoned seconds
- HELOC: < $2,000 draws over 12 months
- Up to $5,000 or 2% cash back allowed (max)
Cash Out Refinance Requirements
- Requires 6-month ownership unless: inherited, awarded, delayed financing, or owned by borrower’s LLC/trust
- Cash-out for reserves allowed
- Additional 5% LTV reduction if purchased <6 months
DSCR Cash-Out Requirements:
- Proceeds cannot be used for personal or consumer purposes.
Borrower Requirements
General:
- Must pass fraud report / background QC
- Social Security Number required (except Foreign Nationals)
- Non-occupant co-borrowers allowed (family only)
Residency Types:
- U.S. citizens
- Permanent & Non-Permanent Residents
- Foreign Nationals allowed (with restrictions)
First-Time Homebuyers / Investors
Allowed but subject to guideline overlays.
Credit Guidelines
Credit Report Requirements
- Full tri-merge
- All high-level fraud alerts must be cleared
- Gap credit report required
Major Events
- Bankruptcy, Foreclosure, DIL, Short Sale – seasoning per matrix
- Mortgage lates evaluated case-by-case
- Judgments & liens must be resolved or payment plan documented
Tradelines:
- Standard tradeline minimums required
- Non-traditional credit allowed case-by-case
Assets
Documentation:
- 1–2 months statements
- Business funds allowed with CPA letter
- Gift funds allowed (per matrix and occupancy)
Reserve Requirements
- Based on loan amount, occupancy, and program type
- Cash-out from subject transaction may satisfy reserve requirements
Income Documentation
- Full Doc: 1 or 2 years
- Bank Statements: 12 or 24 months
- 1099: 1–2 years + paystub
- P&L Only: 12-month CPA-prepared
- WVOE: Written VOE + 2 months statements
- Asset Depletion: Eligible asset types only (brokerage, checking, savings)
General Rules:
- Income must be stable with acceptable trends
- DTI per program matrix
- Residual Income requirements apply
DSCR (Investor Only)
Key DSCR Highlights:
- Qualification based on rental income vs PITIA
- Short-term rental income permitted if appraiser supports
- DSCR < 1.0 allowed per matrix (ratio dependent)
- Cash-out allowed but proceeds must be for business/investment use
- First-time investors allowed with restrictions
Documentation:
- 1007 Rent Schedule
- Lease or market rent
- Operating history not required for non-experienced investors
Available in the Following States:
Alabama, Arizona, California, Colorado, Connecticut, Delaware, Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Kentucky, Massachusetts, Minnesota, Mississippi, Missouri, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, Oklahoma, Oregon, Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, and Washington.
Last Updated on 5 days ago by Broker Mortgages