Non traditional mortgage loans are hot in any market. More so in places like California where not only is the heat on but home prices are high and the sunshine tax game is strong.
So how does one get into the market and buy a first home, second home, investment property, and beyond? Using a loan consultant with personalized service of your goals is vital.
What are the loan programs and do I qualify?
Stated Income-Stated income loans allow borrowers to “state” what they make on a loan application without sourcing pay-stubs, W-2’s, 1099’s or tax returns. Interest rates are typically higher and the required down payment is higher than traditional mortgage loans due to the risk factor of not verifying income. A good option for self-employed, 1099 and commission based borrowers.
Business Bank Statements-The lender verifies deposits for 12 or 24 months with this loan program. They look for patterns and will average the deposits to source income. Great for small businesses and self employed borrowers. Interest rates are competitive and slightly higher than traditional loans.
Self-Employed Loans-The two already mentioned are great options here. We can also use business tax returns to verify income based on the percentage owned of the business.
Multiple Borrowers-Many loan programs allow multiple borrowers living in the home or not to qualify together. This is a great option for all families and people seeking to purchase and own a percentage of the property. It is always important to consult with a real estate attorney before closing escrow to understand how percentages work and what you agree upon with your co-borrowers.
Non-Occupant Borrowers-This one is used frequently when qualifying for the loan. This is often a relative or family member who is willing to lend their credit and income to qualify but does not live in the home or make payments on the loan. Great option to get into the real estate market.
New Doctor Loans-This is a niche product and based on the earning potential of a new doctor that may have student loan debt. There is a formula used to qualify new doctors at competitive interest rates and loan programs.
How Much Money Do I Need?
Out of the box loans are going to cost more on the down payment and possibly closing costs. Each loan scenario is different and best to understand before taking the leap. 20% is ideal plus 3% in closing costs off the purchase price of the home. More or less may be required.
Don’t wait until another real estate cycle passes you by. Do it now.