Many borrowers have substantial property equity but cannot satisfy the documentation standards imposed by conventional mortgage lenders. They may be self-employed, recently experienced a credit event, or have income that is difficult to demonstrate through tax returns. We offer an alternative program that places the greatest emphasis on the real estate itself. The program is available for qualifying primary residences and investment properties, with no income verification and no minimum credit score.
An Asset-Based Approach to Mortgage Approval
This program does not qualify borrowers using tax returns, pay stubs or debt-service coverage calculations. Instead, underwriting centers on the property’s value, condition, location and available equity.
- Personal or business tax returns
- W-2 forms or pay stubs
- Bank statements to document qualifying income
- Employment verification
- A minimum FICO score
- A DSCR calculation
- Traditional debt-to-income qualification
Primary Residences Now Accepted
One of the most significant features of this program is that it includes owner-occupied homes. Equity-based financing of this type is frequently limited to investment properties, but qualifying borrowers may now use it for a primary residence as well.
- Owner-occupied home purchases
- Owner-occupied cash-out refinances
- Investment-property purchases
- Investment-property cash-out refinances
Occupancy eligibility remains subject to state law, underwriting requirements, and lender approval.
Core Lending Guidelines
- Loan amounts from $125,000 to $1.5 million
- Maximum 55% loan-to-value ratio
- At least $150,000 in remaining property equity
- Purchase and cash-out transactions
- 30-year fixed-rate mortgage
- Fully amortizing payments
- Interest rates generally in the high 9% range with points
- Five-year prepayment penalty at 5%, where permitted
Actual pricing and terms depend on the complete loan scenario, property type, occupancy, and location.
Credit Problems May Not Prevent Approval
There is no minimum FICO requirement under this program. The absence of a required credit score means borrowers may still be evaluated despite substantial credit challenges.
- Recently discharged bankruptcy
- Low or insufficient credit scores
- Recent mortgage late payments
- Irregular or difficult-to-document income
- Self-employed borrowers with significant tax deductions
- Borrowers declined by conventional and traditional Non-QM lenders
Collateral Quality
Strict property requirements balance the surrounding credit and income. The real estate must be suitable collateral with dependable value and marketability. Severely distressed properties, located in remote rural markets, rated in C5 condition, or considered highly unusual may not be eligible. Specialized properties with a limited pool of potential buyers can also present a problem.
- Current appraised value
- Property condition
- Market location
- Resale demand
- Available equity
- Overall collateral risk
The 55% maximum LTV and $150,000 minimum-equity requirements are firm. High income or other compensating factors generally cannot overcome a property that fails to meet the collateral guidelines.
If you have considerable equity in an owner-occupied or investment property, contact us to review your scenario.
