One of the casualties of the mortgage meltdown was the no-doc mortgage (also known as no-document or stated income). While these loans were originally designed for the self-employed and those with little income but plenty of assets, they were hijacked during the ‘anything goes’ mortgage days and became known as ‘liar loans’ in which people who had no business getting a mortgage lied about their income and did not have to provide any supporting documentation. As a result, they have been non-existent for several years which has made it very difficult for those who had a legitimate use for them.
I recently learned that Supreme Lending in Austin is bringing back a type of no-doc mortgage. I sat down with John McClellan to find out the specifics. While this loan is targeted to a small subset of borrowers, it is a very powerful tool for those who qualify. However, it is a start, and I expect we will see more no-doc loan programs as time goes on. It won't (and shouldn't) get back to the 'liar loans,' but a return to the original use of them would be most welcome.
These loans are available to both owner-occupants and investors. The minimum loan amount is $200,000 and the maximum loan amount is $2 million. The available loan types are 5/1, 7/1, and 10/1 ARMs. Closing on this type of loan is longer that other types, so allow 60 days get to the closing table. Another great feature is that these loans can be issued to entities such as Trusts, LLCs, and Partnerships.
For owner-occupants, the minimum credit score is 680. The minimum down payment is 30%, but that can be done with as little as 10% cash down and 20% pledged asset. A pledged asset is collateral (beyond the property) such as CDs, stocks, or bonds. To determine the amount that can be borrowed, reportable assets are examined first (essentially whatever shows up on a tax return). Then assets are examined (CDs, stocks, bonds, etc) to increase the potential loan amount. For those at least 62 years old, retirement income and accounts can be used. The more the borrower has in assets and the older the borrower is, the more that can be borrowed. To give an example, a 56 year old borrower with $500,000 in the bank can add $2,770 per month in stated income to their documented income.
For investors, the minimum credit score is 700, 50% down is required, of which 40% can be a pledged asset. These loans are even available for non-warrantable investment condos.
Foreign nationals can also utilize this program with a minimum of 50% down, of which 40% can be a pledged asset.
For more information on these loans, contact John McClellan at Supreme Lending at 512-279-1150. For more information on buying a property with these loans, contact me via email, online form, or at 512-735-7200.
