For brokers, knowing the best alt doc loan, stated income loan and no document loan options is the way to help more qualified borrowers remove obstacles to buying a home or investment property.
Non-QM loans are a critical cornerstone of the mortgage market. Not every creditworthy borrower can sail through the approval process for a qualified mortgage (one that checks all the Dodd-Frank Ability-To-Repay boxes). For a QM, the lender has verified the borrower’s ability to repay the loan by looking at tax returns, pay stubs and other third party documentation. As a broker, you know that many borrowers don’t have those documents. Qualified mortgages can’t meet every creditworthy borrower’s needs.
Several lenders offer alternative documentation loans to serve this population, but in many cases, the door to a mortgage remains closed because of prohibitive documentation requirements. Furthermore, some big banks have clamped down on funding non-QM loans in response to the coronavirus pandemic and changing economic conditions.
Quontic’s non-QM loan options bridge the funding gap for qualified borrowers who are ready for a mortgage but can’t provide the income documentation some lenders require. Quontic can approve more borrowers than other non-QM lenders because of unique loan features you won’t find elsewhere.
When you weigh non-qualified mortgage options for your clients, it helps to know what kind of borrower might be best suited to an alt doc loan. Here is some guidance about the people who could be great candidates for a Lite Doc loan from Quontic.
Home loans for self-employed or sporadic income earners
Self-employment can throw a wrench into your clients’ mortgage plans. With a typical non-QM, your client is going to need at least two years of income documentation, including tax returns, 1099s and a profit and loss statement. Someone who’s been self-employed for just one year may have a hard time providing those documents.
For a borrower who works a regular 9 to 5 job, inconsistent income can be a hurdle. Other lenders may shy away from offering a loan to a borrower whose income dips and rises dramatically, even through no fault of their own. Someone who works more overtime during the holidays, for instance, or who works on a rotating schedule may have trouble explaining uneven income.
Lite Doc loans help solve both those problems. At Quontic we offer Owner Occupied Lite Doc loans to people who are self-employed or salaried with irregular income, and who will reside in the home they want to buy (we have another program for rental properties). We’re interested in helping people who may be shut out of traditional loans due to income documentation requirements, despite good credit.
Our Lite Doc loan program is different from other no doc loan or stated income loan options. For self-employed buyers, we accept a 12-month profit and loss statement prepared by a CPA, accountant, tax-preparer, or enrolled agent as proof of income. You only need to be in business for one year or more. For salaried buyers, we require a verification of employment letter with proof of current income only from all sources, which includes tips, overtime, bonuses, and commissions. We do not require W-2s or tax returns. We do ask for a one-month bank statement covering at least 30 days, but only to verify funds to close.
Buyers are allowed to use gift funds to cover 100% of their down payment and closing costs. For clients who are looking at a cash out refi instead of a purchase, the cash proceeds may be used toward reserves (with conditions).
These guidelines set Quontic’s Lite Doc loans apart from other alt-document loan options and make it possible to help a broader range of buyers.
Mortgages for investors
When you’re trying to help someone buy a rental property, you have your work as a broker cut out for you even more. Qualified mortgages for investors traditionally have even higher standards for borrowing than for owner-occupied loans.
Non-qualified mortgages were once deemed too high risk for rental investing but times – and non-QM products – have changed.
Now, a Lite Doc loan can be a reality for property investors, regardless of their income or even their history with other rental properties. At Quontic, we’re helping to advance funding opportunities to more investment property owners.
The key features of this loan program are similar to those for owner-occupied loans in terms of income verification, asset verification and down payments. Investors who are interested in these loans can qualify with a debt to income ratio up to 50% and the subject property doesn’t need to have positive cash flow. This loan is available in amounts up to $3,000,000.
Lite Doc loans when others fall short
Lite Doc loans are available for 1-4 unit properties, including second homes, condos, PUDs, non-warrantable condos and co-ops. Loan terms include 5/6-month and 7/6-month ARMs as well as 15-year and 30-year fixed rate mortgage loans. In addition to individuals, we also accept corporations and LLCs for our investor programs, which is helpful if you cater to that type of clientele.
When a client comes to you because they’re frustrated with a lack of mortgage options, consider whether a Lite Doc loan is the right choice. Not all non-qualified mortgages are created equally and we think our innovative program deserves your attention.
If you’d like to learn more about how we approach non-qualified mortgage lending differently or explore our Lite Doc loans in more detail, become a Quontic broker today and serve more clients.
This information is provided for the benefit of Mortgage Professionals and not intended for Consumers or the general public.
All lending products are subject to credit & property approval. Rates, program terms & conditions are subject to change without notice. Not all products are available in all states or for all amounts. Other restrictions & limitations apply. Information is accurate as of the date listed below and may change without notice.
September 19, 2022