Self Employed Clients

There are many new loan programs available for your clients in this market, but on the flip side there are many programs that no longer exist. The biggest cut back is on stated income or no income verifiers. These loans are mainly used by self employed individuals who have great income but can not prove it due to good accountanting work. As we know they traditionally write much of their income off of their taxes, so their provable income shows much less then they actually make. This now causes problems qualifying for mortgages and home equity loans. Lenders have become less willing to offer those who can not prove their income mortgages, and when they do the loans are cut back to lessen the lenders risk.

I have listed some of the of the Fannie Mae guidelines relating to non income loans.

The maximum loan to value is 80% on one loan on a primary residence. The reason for this is mortgage insurance companies are not offering MI on stated loans at all. The answer to this problem is to have your client take a line of credit from his bank for the remaining loan to value, or you can have the seller take back a second in the same amount.

example

$220,000 purchase price, borrower is putting down 10% or $22000. The max amount for this stated income loan is 80% or $176,000. That leaves us $22000 short on this transaction. We can have the seller hold a $22000 second for 12 to 24 months or get a line of credit.

Stated income loans are almost if not totally impossible to get on investment properties.
Please understand that lenders change their guideline everyday and what isn't available today may be available tomorrow. It is always in your clients best interest to speak with a mortgage professional to see what they can qualify for.