Two decades ago, the major lenders employed mortgage underwriting requirements for collateral, capacity and credit history – the three Cs. Collateral meant that the home buyer made a down payment, preferably of 20 percent or more of the value of the house, never less than 10 percent. Capacity referred to the maximum share of a borrower’s income that could be devoted to mortgage payments and other debt service. Credit history meant that the borrower demonstrated an ability to manage credit responsibly, an ability that has come to be summarized in a credit score.
Nontraditional mortgages are those in which the lender deliberately waives one or more of the three Cs. Over a very short span of time, beginning in the late 1990s and culminating in 2007, the U.S. housing market came to be dominated by such mortgages.
Here are my favorite Niche Loan Programs to help US Homebuyers Qualify for a Mortgage in 2017:
1. Jumbo Loans with 5% Down – 20% down is not always required on Jumbo loans.
2. One-Day out of Foreclosure, Short Sale and Bankruptcy – No minimum waiting periods on major credit issues.
3. Exclude Current Mortgage Debt – All mortgage debt including primary residences, second homes and investment properties currently owned.
4. 12-Month Bank Statement Program – Income based on deposits from business account into personal bank account. Tax returns not required.
5. Non-Warrantable Condos – Financing available for condo projects that do not qualify for conventional financing.
6. Assets-for-Income Program – Qualify using money in the bank and not income filed with the IRS. Tax returns not required.
7. 1-Year Tax Return Program – Qualify on most recent tax year’s income. A 2-year income average not required.
8. Foreign National Loans – 20% down payment if a borrower works and lives in the US.
9. 1-Year Self Employed – The standard 2-year self-employment history is not always required.
10. Doctor Loan Program – Student debt excluded when deferred for 12 months.
11. Hard Money Loans – A last resort high interest, high cost loan, allowing no income and bad credit.
All programs are for qualified buyers only.
The mortgage industry is constantly evolving. Loan programs come and go. Lending guidelines change daily monthly, weekly and sometimes daily. Loan programs are never good or bad. Loan programs are more like tools. Make sure you do your homework and always pick the right tool for the job!
Contact me anytime with questions at [email protected]