This program is designed to provide mortgage credit to well qualified self-employed borrowers earning monthly income that is more clearly documented through alternative income documentation. As a result, the Ability-to-Repay income and employment factors are met through the review of bank statement cash flows over 24 months (to verify borrower income) and the review of at least 2 years of employment history and business existence (to verify employment).
This program is based on evaluating the income available to the borrower as generated by the borrower’s business cash flows. As such, the program contemplates a business owner who has established a separate bank account for his or her business operations (“Business Bank Statement”) and also maintains a separate bank account for distributions and personal expenses (“Personal Bank Statement”). Note, comingled accounts (i.e. Borrower runs a business out of personal account) will be handled on an exception basis.
Qualifying Income for the program may be based on either Personal Bank Statements or Business Bank Statements. The program has been developed based on the rationale that owners of simple businesses may be qualified through Business Bank Statements, however, as businesses grow to be larger, more complex operations, business owners often distribute excess income to personal bank accounts on a regular basis.
As a result, the program incorporates a waterfall approach to determine the appropriate qualifying income methodology.
For more information about this NON-QM mortgage program, contact our office and one of our loan specialists can discuss it with you.