top of page

NON-QM LOAN MATRIX

Loan Purpose

  • Purchase

  • Limited Cash-out Refinance

  • Cash-out Refinance

  • Delayed Financing Refinance

Occupancy Types

  • Principal Residence Properties

​

  • Second Home Properties

Loan Programs

  • Full Doc

​

  • 12 months Personal or Business Bank Statements

​

  • 12- or 24-month CPA P&L (Max 75% LTV/CLTV)

​

  • One Year Income Documentation - Wage Earner or Self-Employed

​

  • Asset Utilization 

LTV/CLTV

Purchase

  • Primary Residence: 90%

  • Second Home: 85%

  • Investment: 80%

​

Rate / Term Refinance

  • Primary Residence: 80%

  • Second Home: 80%

  • Investment: 75%

​

Cash-out Refinance

  • Primary Residence: 80%

  • Second Home: 75%

  • Investment: 75%

​

Loan Amount Limits

  • Minimum loan amount: $125,000

​

  • Maximum loan amount: $3,500,000

Maximum Cash OUt

  • LTV/CLTV equals or less than 70% - Unlimited.​

​

  • LTV/CLTV greater than 70% - $1,00,000.

Delayed Financing Refinance

  • Delayed financing (on properties purchased by the borrower with cash and owned < 12 months) are permitted if the original transaction was arm's length.

  • Delayed financing cash out proceeds are eligible for Asset Utilization..

Personal Bank Statements 

  • Option 1: Personal bank statements with evidence of business bank account

    • 100% of business deposits in a personal bank account can be used​

    • Proivde most recent 2 months business statements to validate deposits are from the borrower owned business bank account.  

​

  • Option 2: Personal bank statement with no business bank account

    • Comingled business and personal with no business account for non-service businesses are considered as business bank statements with the appropriate expense factor (20% Service Business, 50% non-service business) applied.

​

  • Qualifying Income:

    • Qualifying is total eligible deposits divided by 12 months.​​​​​

​

Business Bank statements

  • Transfers from other bank accounts into the business bank accounts will require conclusive evidence that the source of transfer is business related income.

  • The expense ratio should be reasonable for the profession

  • The expense ratio should be consistent with the revenue and expenses in the business bank statements.

​

  • Fixed expense ratio:

    • Option 1: 50% Expense Ratio will be used if the following applies:​

      • Loan with LTV > 85.01.​

      • Borrower has a minimum of 25% ownership of a business.

      • Decreasing or negative ending balance must be addressed.

      • Cyclical and seasonal trends may be taken into consideration.​​

    • Option 2: 20% Expense Ratio eligible if the following applies:

      • Max LTV 85%.​

      • Borrower is a sole owner and operator of the business.

      • Service business.

      • Does not require office space that would incur rent.

  • Third Party Provided Expense Ratio (CPA/Tax Attorney/Enrolled Agent/PTIN):

    • Purchase & Rate/Term:​

      • Max LTV 80%​

    • Cash out:

      • Max LTV 75%​

    • 20% Floor

    • The Tax Professional must:

      • provide an expense statement specifying business expenses as a percentage of the gross revenue - 20% floor.​

      • attest that they have filed the borrower's most recent three years business tax returns.

      • certify the Expense Ratio representing an accurate summary of the applicable cash expenses of the business.

      • verify the borrower's ownership percentage.

    • Large deposits, defined as 25% greater than monthly average the deposit was made, in bank accounts being used to qualify require a letter of explanation or evidence they are business related.

    • Self-employed borrowers who file their own tax returns are not eligible.

12 - 24 Month CPA/EA/PTIN Profit and Loss 

  • Max LTV

    • 80% Purchase / Rate & Term​

    • 75% Cash Out

  • Self-Employed borrowers only with >= 50% ownership of respect business.

  • Most recent 12- or 24-month Profit & Loss statement (P&L).  

    • P&L statements must be completed by an independent CPA/EA/PTIN.

  • ​CPA/EA must provide attestation that they prepared borrower's tax returns and that they are not related to the borrower or associated with the borrower or borrower's business.

  • CPA /EA must attest that they have performed either the following functions:

    • audited the business financial statements, or​

    • reviewed working papers provided by the borrower, and they certify that the P&L represents an accurate summary of the business cash flow and applicable cash expenses.

  • Self-employed borrower who file their own tax returns are not eligible.

  • Minimum of 2 years self-employment in the current profession.

  • An internet search of the business is required with documentation to be included in the credit file to support existence of the business.

Subordinate Financing

  • New subordinate financing (institutional) allowed for primary residence purchase transaction only.

​

  • Seller carried subordinate financing is ineligible.

​

  • Existing subordination is permitted on refinances.

Limits on Number of Financed Properties

  • No limit to the number of financed properties.

​

  • The maximum number of loans that can be funded for the same borrower is limited to 10 or $5,000,000.

Borrower Eligibility

  • U.S. Citizens

​

  • Permanent Resident Aliens

​

  • Inter-Vivos Revocable Trust

​

  • Non-Occupant Co-borrower (Allowed per AUS)

​

  • First Time Homebuyer

​

  • Limited Partnerships, General Partnerships, Corporations, Limited Liability Company (layered entities not permitted, such as whose members are trust)

​

Income and Employment

The stable and reliable flow of income is a key consideration in mortgage loan underwriting.  A key driver of successful homeownership is confidence that all income used in qualifying the borrower will continue to be received for the foreseeable future.  If the income does not have a defined expiration date and the applicable history of receipt of the income is documented, the income is considered as stable, predictable, and likely to continue.  Otherwise, additional documentation from the borrower will be required to analyze the likelihood of the income will continue for at least next three years. 

​

Employment income refers to the income received from work in the form of W-2.  Verification of the most recent two years of employment and income are generally required.  It can be done by obtaining copies of the most recent pay stubs, IRS Form W2's, and a written Verification of Employment (VOE), or direct electronic verification of employment by a TPV vendor.  Primary employment is considered if the employee typically works 40 hours of service per week. If it is less than 40 hours of service per week, it is considered as part-time employment.  Both types of employment are acceptable, however, part-time employment should have a recent 2-year consecutive employment and it is likely to continue.  Similar with part-employment, these employment or incomes are also acceptable, such as seasonal employment, overtime, bonus, tips, commission.

​

Self-employment income refers to income generated by a business in which the borrower has a 25 percent or greater ownership interest.  Self-employment income can be used if the borrower has been self-employed for at least two years.  However, if the borrower has less than two years history, self-employment income may only be considered if the borrower was previously employed in the same line of work or in a related occupation for at least two years.  The lender will review the self-employment income based on the recent Federal tax returns.  In addition, a year-to-date Profit and Loss (P&L) statement and balance sheet are required if more than a calendar quarter has been elapsed since the date of the most recent calendar or fiscal year-end tax period.

 

Other sources of income are also acceptable are: Social Security disability, VA disability, private disability, alimony, child support, maintenance income, military income, retirement income, rental income, capital gains or losses, Trust income, Annuities, Note receivable income, royalty payment income, boarder income.

​​

Asset Assessment

Lenders will need to verify a borrower has sufficient funds for closing, down payment, and financial reserves (if applicable) with these following types of documentation: Request for Verification of Deposit (Form 1006), copies of bank statements or investment portfolio statements, copies of retirement account statements.  Statements should not be 45 days earlier than the date of the loan application.  Either the two- or one-month period of account activity will be needed depending on the loan application type. 

​

Any deposit exceeding 50% of the total monthly qualifying income will be considered as a large deposit, and it needs to be evaluated; otherwise, the verified balance must be reduced by the amount or portion of the undocumented large deposit.  

​

Reserves are measured by the number of months of PITIA that a borrower could pay using his or her financial assets.  Borrowers with multiple properties must meet the reserve requirements for each individual loan basis and each additional loan must have an additional six (6) months of reserves.  Reserves must be verified and comprised of liquid assets the borrower can readily access.  Cash Out and Gift Funds may be used to meet reserve requirements. Restricted stock is not an acceptable source to meet reserve requirements.

​

  • If loan amount is up to $2,000,000 - 6 months.

​

  • If loan amount is greater than $2,000,000 and up to $3,500,000 - 9 months.

​

  • No reserves requirement is needed for the Asset Utilization program.

​

Gift Funds

  • Primary Purchase transaction only​

    • LTV/CLTV=< 80% - borrowers must have 5% of their own funds documented, but not required to use.

    • Gift of Equity allowed up to 75% LTV/CLTV (primary only) - subject property mortgage rating from seller is required.

    • Non-borrowing title holder, or member of LLC/entity who is contribu8ting funds is not considered a gift but must be seasoned and sourced.  

    • Non-borrowing spouse residing or will reside in property who is contributing funds is not considered a gift but must be seasoned and sourced.

    • Gifts must be from family members.

​

  • LTV/CLTV > 80% - borrowers must have 10% of their own funds documented, but not required to use.​

Credit Score / History

All borrowers must have a minimum of 2 credit scores.  Each borrower must have 2 tradelines or joint borrowers must have a total of 3 tradelines combined, rated at least 12 months, with activity in the last 24 months.  Tradeline may be opened or closed.  Eligible tradelines cannot have any derogatory history in previous 24 months.   

​

No authorized user accounts will be used to satisfy minimum tradelines.  Non-traditional credit is not allowed as an eligible tradeline.

 

A credit freeze may remain if it is reported under one bureau only.  More than one frozen bureau requires the freeze to be lifted by the borrower and a new report provided.  

​

Rapid rescore of credit permitted for confirmation of pay down and/or payoff of debt and correction of reporting errors.

​

All borrowers must have a mid FICO of 660 or higher.

​

A minimum of twelve (12) months verified housing history is required with no late.  Borrowers with no mortgage/rental history will require an exception and is limited to max 80% LTV.  If the housing history reflects a forbearance, documentation from the servicer of the completion is required.  The deferred balance may be paid off with the subject property refinance. 

​

Derogatory Credit Events in the Credit Report

​

  • At least four (4) years must have elapsed since bankruptcy discharge or dismissal, foreclosure, notice of default (NOD), short sale, deed-in-lieu, or modification measured from the date of completion to the date of application.

​

  • Liens or judgements that have the potential to impact lien position must be explained and paid off.

​

  • Non-title charge-offs and collection open less than 2 years and exceeding $10,000 must be paid.

​

  • Medical collections less than $15,000 are not required to be paid.

​

  • IRS tax payment plans approved by IRS are permitted if current and do not carry a lien on any property.

​

Debt-to-Income (DTI)

  • LTV/CLTV greater than 85% - max DTI is 45%

​

  • LTV/CLTV equal or less than 85% - max DTI 50%

Property Eligibility

The dwelling must consist of one to four units.  It must be:

​​

  • residential in nature as defined by the characteristics of the property and surrounding market area.

​

  • secured by an interest in real property within the meaning of the Internal Revenue Code.

​

  • safe, sound, and structurally secure.

​

  • readily accessible by roads that meet local standards.

​

  • served by utilities that meet community standards.

​

  • suitable for year-round use.

​

Rural properties are not allowed.

​

Interested Party Contributions

  • LTV/CLTV > 80% - 3%

  • LTV/CLTV =< 80% - 6%

bottom of page