We are delighted to announce another innovative program to help homeowners with mortgage financing. The Cashflow program is designed for those that generate income from their investment property.
The Investor Cash Flow option provides a unique opportunity for borrowers purchasing or refinancing investment properties; the borrower is qualified using only the rental income from the subject investment property.
The program option requires at least one borrower to have a documented 12-month history of managing rental properties (history is not required to be in the most recent 3 years).
Key features of the Investor Cash Flow option include:
- 1-4 unit investment properties only
- SFR, PUDs, and condos (warrantable and non-warrantable) eligible
- DTI not considered; qualification is based on the debt service coverage ratio (DSCR) of the subject property. A DSCR of ≥ 1 is required
- The DSCR is calculated as follows:
– The subject property gross rent divided by the subject property PITIA equals the DSCR
Example 1: Gross rent: $2,000; PITIA: $1750; $2,000/$1750 = 1.142 DSCR (acceptable) Example 2: Gross rent: $800; PITIA: $1,000; $800/$1000 = 0.8 DSCR (unacceptable)
- Rents are determined using 100% of the lesser of the current rent or market rent as determined by the appraiser. Copies of leases must be provided when applicable.
- Employment and income are not verified
- Income Cash Flow transactions are considered “business purpose” loans and are not subject to ability-to-repay or HPML requirements.
- Gift funds from an immediate family member are eligible for down payment and closing costs; ineligible to satisfy reserve requirements. Use of gift funds requires either 5% borrower own funds or 10% LTV reduction
- Maximum 15 financed properties, including subject, allowed. Additional one-month PITIA reserves required for each additional property or, as an alternative, a percentage of the aggregate unpaid principal balance of all outstanding mortgage loans and percentage of value of properties owned free and clear. Refer to guidelines for requirements.
Business Purpose Loans: For the purchase of a rental property or refinance a rental property with proceeds for bonafide business use.
- Declaration of intent to Proceed: Applicants must submit the fully completed Declaration at the time a completed Application is received
- Source of income for repayment:
Limited to subject property’s income at:
-75% for 1-4 Family homes; or
-90% for condos and co-ops
Such income is to cover loan’s PITI expenses (+ HOA or Maintenance) in full. Subject’s rental income to be determined via Existing leases; RE broker’s estimate of rent and existence of a listing to sublet.
Title to property: Must be in the name of corporation, LLC or partnership
- Borrower: Entity in Title
- Guarantor(s): Must be a natural person who will be an officer or member of the Borrower (Entity in Title).
- Maximum LTV: Call us for max Loan To Value allowed. For purchase – 65% and for Refinance 60% with credit score of 700. Lower LTV with lower credit scores etc. Floor: 45%.
- Pricing: Contact us for pricing
- Credit (Guarantor’s credit):
-Not more than 2×30 mortgage lates in prior 12 months unless mitigating circumstances or compensating factors exist.
-Minimum credit score is 620.
-Authorized officer and the Guarantor must attend the closing.
-Closing Declaration For Rental Property Loan must be signed by both.
-Borrower’s attorney must attend the closing and execute the appropriate portion of the Closing Declaration.
*This product is not regulated by the New York State Department of Financial Services
**Currently due to COVID-19 epidemic this program is only available in New York and Florida.