Self-Employed Lending Guidelines With No Income Tax Returns Required
This ARTICLE Is About Self-Employed Lending Guidelines With No Income Tax Returns Required Required
Obtaining a mortgage for self-employed borrowers was a hurdle after the 2008 Real Estate Meltdown. No-doc and stated income mortgages came to a complete stop. Teaser rate mortgages were no longer available.
Self-Employed Lending Guidelines With No Income Tax Returns Required made self-employed borrowers nearly impossible to qualify for a mortgage. Lenders re-introduced and launched bank statement loans for self-employed borrowers. There are no income tax returns required on bank statement loans. Lenders will use the borrower’s bank statement deposits for the past 12 months. The average monthly bank statement deposit will be the income used. Borrowers can either use personal and/or business bank statements.
Self-Employed Lending Guidelines With Calculating Self Employed Income for a Mortgage
Self-employed business owners often get to deduct expenses from their business operations from their tax returns. The net taxes business owners pay is the adjusted gross income. What this means is self-employed taxpayers only pay taxes after deductions. This is great for self-employed taxpayers but it is not good when it comes to qualifying for a mortgage.
The IRS enables self-employed borrowers and 1099 wage earners to utilize unreimbursed business expenses. Many self-employed borrowers can often afford higher-end homes. But due to many deductions on their tax returns, they often could not qualify. The good news is that self-employed borrowers can now qualify for bank statement loans with no income tax returns required at Gustan Cho Associates.
Self-Employed Lending Guidelines On Non-Qualified Mortgages (QM)
Self-employed borrowers who cannot qualify for traditional loans, Non-QM Mortgages are an option. Non-QM mortgages are portfolio loans offered by many lenders. Alternative financing and non-QM loans are more lenient when it comes to self-employed lending guidelines. Mortgage underwriters can be open-minded and make exceptions when processing and underwriting Non-QM loans. Each case scenario is evaluated on a case-by-case scenario basis. The overall credit, income, asset profile is taken into account by mortgage underwriters. Bank statement loans for self-employed borrowers are non-QM loans. No income tax returns are required on bank statement loans. Borrowers can purchase primary, second, and investment homes with bank statement loans.
Self-Employed Mortgage Guidelines And Requirements
There are no set Self-Employed Lending Guidelines on Non-QM Mortgages. Every investor has its own lending requirements. Exceptions can be made. If a particular borrower does not meet a particular mortgage guideline by an investor, the investor can waive the guideline. This depends on other compensating factors and the individual borrower.
However, the following are the general self-employed lending guidelines by most non-QM lenders:
- The minimum credit score of 500 FICO
- 10% to 20% down payment on a home purchase
- There are no maximum loan limit caps on non-QM loans
- There is no private mortgage insurance required
- The maximum debt to income ratio cap is generally 50% DTI (exceptions can be made)
- Non-QM loans are for primary, second homes, and investment properties
Mortgage Rates On Self-Employed Loans
Non-QM mortgage rates are higher than mortgage rates on government and/or conventional loans. Lenders base loan level pricing adjustments on mortgage rates based on risk factors. Non-QM Lenders take higher risks than traditional lenders. This is because they cannot sell these loans on the secondary market.
Mortgage Rates on non-QM Loans are based on the following:
- Credit Scores
- Loan To Value
- Debt to income ratios
- Type of property
- Credit Tradelines
- Compensating Factors
- Other factors
For more information about this article and/or other mortgage-related topics, please contact us at Gustan Cho Associates at 800-900-8569 or text us for a faster response. Or email us at firstname.lastname@example.org. The Team at Gustan Cho Associates Mortgage Group is available 7 days a week, evenings, weekends, and holidays.
August 24, 2021 - 3 min read