Self-employed, investor, or turned down elsewhere

Self-employed: bank statement loans

If you’re self-employed, your tax returns may show less income than you actually earn after write-offs. Conventional and FHA loans generally use tax returns. A bank statement loan instead looks at deposits to your business or personal accounts, often over 12 to 24 months, to document income.

• I offer bank statement loans. We’ll first check whether a standard loan with your tax returns works, because that’s usually less expensive.
• These are non-QM loans. Lenders still have to make a good-faith determination that you can repay, so expect questions about your business and your deposits.
• They usually cost more and need a larger down payment than conventional loans; the exact terms are set by each lender.
• Helpful to have: 12 to 24 months of statements, proof the business exists (license, CPA letter or similar) and an explanation of large deposits.

Sources: CFPB, What is a Qualified Mortgage? · Bank statement basics

Investors: DSCR loans, 2–4 units and 5+ units

A DSCR (debt service coverage ratio) loan qualifies mainly on the property’s rental income compared with its payment (principal, interest, taxes, insurance and HOA dues), rather than on your personal income. It’s for investment properties, not a home you live in.

• I offer DSCR investor loans. Bring the address, the rent (or expected rent) and the costs, and we’ll look at your scenario.
• Each lender sets its own minimum ratio, down payment and reserve rules, so there’s no single standard. I’ll tell you what applies to your property.
• 2–4 units you live in: you can use a standard residential loan (conventional, FHA or VA, if you qualify). Fannie Mae’s rental income rules allow rent from the other units, with documentation such as leases or the appraiser’s rent schedule. Rent from the unit you live in doesn’t count.
• 2–4 units as a pure rental: conventional investment loans and DSCR loans are both options; we’ll compare them.
• 5 or more units: that’s a commercial (multifamily) property. Residential loan rules stop at four units; Fannie Mae, for example, runs a separate multifamily business. Some DSCR lenders do finance 5+ units under commercial programs with different terms. I’ll tell you plainly whether your property fits a residential or commercial loan.

Sources: Fannie Mae Selling Guide B3-3.1-08, rental income · Fannie Mae Multifamily (5+ unit properties) · HUD Handbook 4000.1, FHA Single Family Housing Policy · DSCR basics

What “non-QM” means

A Qualified Mortgage (QM) follows a set of federal rules that limit risky features. A non-QM loan can document income or qualify a borrower in ways a QM can’t, such as bank statements or rental income. Non-QM is not the same as no rules: the lender must still check that you can repay. I offer non-QM loans when they’re the right fit, and I’ll compare them with a standard loan first.

Sources: CFPB, What is a Qualified Mortgage?

Turned down elsewhere? Get a second look

A denial from one lender doesn’t always mean no. Lenders differ in the loan types they offer, how they document income and which properties they accept. Sometimes a different loan, a different way of documenting income or a few months of preparation changes the answer. Sometimes it doesn’t, and I’ll tell you that plainly.

• Under federal Regulation B, a lender that denies a credit application must give you the specific reasons, or tell you how to request them within 60 days.
• Bring that notice, your Loan Estimate if you got one, and a short explanation of what happened. Don’t send your Social Security number or account numbers through this site.
• I’ll look at what stopped the file (income documentation, credit, debt-to-income, the property or the condo building) and whether another path exists.
• There’s no cost to ask and no promise of approval. All loans are subject to credit approval and underwriting.

Sources: CFPB, Regulation B s. 1002.9, notice of action taken · Real estate agents: send me a stalled file.