Reduced Documentation Financing
This specialty program allows for homeowners and buyers to secure financing, who do not meet traditional underwriting requirements. Under this program, borrowers are able to use nontraditional methods of verifying and qualifying their income to the lender for financing. For those of us who are self-employed business owners, we are accurately aware of the major gap differential between our Gross Income and AGI (Adjusted Gross Income). Traditional bank financing solely uses your AGI to qualify for mortgage financing. This program is available for self-employed persons only. One of the many perks of being a self-employed business owner is the amount of write offs we can utilize to limit our tax exposure.
For example, Mr. Smith has a business that grosses $1,500,000 in annual sales. After incorporating his various write offs, his AGI is $350,000 (this is the amount he will pay tax on). Traditional bank financing will only qualify Mr. Smith’s income @ $350,000 not the true amount his company grossed in revenue. This can create major roadblocks for self-employed borrowers trying to seek financing. Clearly, they can afford a home based on their gross income, but to a traditional bank, they may not qualify based on the AGI.
Maximum loan size is $3,000,000. Although there is no minimum credit score requirement, borrowers must show a proven track record in credit management.