One of our borrowers was looking to purchase a primary residence with a loan amount of $1.4 million and a loan-to-value (LTV) ratio of 90%. The borrower has a FICO score of 752 and has been self-employed for 15 years. However, their debt-to-income (DTI) ratio is quite high at 58% based on the net reported income on their tax return.
In this case, a conventional Jumbo loan is not an option for the borrower. However, there is a non-QM (Non-Qualified Mortgage) solution available. This non-QM product allowed the borrower to utilize 12 months of bank statement income instead of relying solely on the reported income on their tax return. With this alternative income documentation, the borrower’s DTI ratio improved to 44%.
By utilizing this non-QM solution, the borrower qualified for the loan with a more favorable DTI ratio. With a large selection of non-QM loan products were can offer the self-employed community loan options allowing them to purchase or refinance a property.