Loan Programs

Conventional Loans

A popular loan type, conventional fixed rate loans feature a constant interest rate for the life of the life. Generally speaking, monthly payments remain constant. Traditionally borrowers are expected to provide a 20 percent down payment though this is not necessarily required. Contact us for details on down payment requirements. Available terms generally range from 10 years, 15 years, 30 years and 40 years.

FHA Loans

FHA (Federal Housing Administration) loans are government-backed mortgage loans designed to make homeownership more accessible for low to moderate-income individuals and those with less-than-perfect credit. They offer benefits such as low down payments, competitive interest rates, and flexible qualification criteria, including lower credit score requirements. FHA loans are popular among first-time homebuyers and serve as a viable option for individuals who may not qualify for conventional mortgages.

VA Loans

VA (Veterans Affairs) loans are mortgage loans specifically designed to assist eligible U.S. veterans, active-duty service members, and certain members of the National Guard and Reserves in achieving homeownership. These loans are backed by the U.S. Department of Veterans Affairs, offering numerous advantages, including no down payment requirement, competitive interest rates, and relaxed credit score standards, making them an attractive option for those who have served in the military. VA loans also often feature lower closing costs, making homeownership more accessible to veterans and their families.

USDA Loans

USDA (United States Department of Agriculture) loans are government-backed mortgage loans that primarily aim to promote homeownership in rural and suburban areas. These loans offer benefits such as zero down payment requirements, competitive interest rates, and more flexible credit criteria, making them an affordable option for low to moderate-income individuals and families in eligible locations. USDA loans are often referred to as Rural Development loans and provide a pathway to homeownership for those who meet the program’s income and location requirements.

Jumbo Loans

Jumbo loans are a type of mortgage loan designed for purchasing high-value homes that exceed the conventional loan limits set by government-sponsored entities like Fannie Mae and Freddie Mac. They offer the flexibility to finance luxury properties, with competitive interest rates and terms, catering to borrowers with strong credit histories and substantial down payments. Jumbo loans typically require larger down payments and stricter credit qualifications, making them suitable for affluent homebuyers and investors seeking high-end real estate.

Reverse Loans

Reverse mortgage loans, also known as reverse equity loans, are only available to homeowners 62 or older. Like its name indicates, this program pays the homeowner either a one-time large payout or monthly installment. Once the loan term expires the house either becomes the property of the lender or the house can be sold to repay the debt. Reverse mortgage loans are great options for seniors looking to increase their monthly income while remaining in their homes. Contact us for more details.

DSCR Loans

DSCR (Debt Service Coverage Ratio) loans are specialized financing options primarily used in commercial real estate and investment properties. These loans focus on the property’s ability to generate sufficient income to cover its debt payments, rather than relying solely on the borrower’s personal income. DSCR loans provide real estate investors with a flexible and tailored financing solution that assesses the property’s cash flow, making them particularly valuable for income-producing properties and projects.

DSCR Loans

The following is a brief checklist of the documents that you will be expected to provide when going through the process of obtaining a DSCR loan. It is important to remember that DSCR lenders are all following the 100% exact same guidelines and requirements, such as conventional lenders originating Fannie Mae-qualified loans.

DSCR lenders typically have mostly the same guidelines, but each are a private lender and has differences. Additionally, not all DSCR loans will have the exact same document requirements based on the deal itself and won’t be applicable. Some examples of this are “entity” documents, which are only required if the loan is taken in the name of an entity, like an LLC.

Application

The DSCR Loan process typically starts with the application. Some DSCR lenders will use the standard Fannie Mae Form 1003 application. However, this is designed for conventional loans (including normal owner-occupied loans) and includes lots of questions and information not required by DSCR lenders.

Several DSCR lenders, especially ones focused solely on DSCR loans and financing real estate investors, will have customized applications that have questions and fields only specifically needed for DSCR loan qualification. These custom-built applications are typically a few pages and take approximately 15 minutes to complete.

Typical items included are questions about the property, real estate investing experience, financial profile, the entity (if borrowing through an LLC), and optional demographic information.

While all of this information will be checked and verified during the underwriting process, and rough estimates are generally OK, it is very important to be truthful on the application. As a DSCR lender finding evidence of misstatements on the application later in the process can have serious consequences.

Credit authorization

This document authorizes the DSCR lender to pull a credit report for the guarantors on the loan. Note that mortgage lenders use a slightly different credit report with a focus on other real estate debt history than others, so your score with a DSCR lender may be slightly different from what you would find in other places.

Bank statements

Generally, DSCR lenders will require two months of bank statements to prove minimal liquid asset “reserves,” generally in the amount of three to six months of PITIA payments. While these loans must be used for business purposes, it is perfectly fine and acceptable for the individual borrower to pay debt service from personal funds if needed. This can occur if the property experiences vacancy or turnover or maybe is a short-term rental in a seasonal market, and some months bring in light amounts. The liquid asset reserves provide a “cushion” for these cases.

Most DSCR lenders will also allow for retirement accounts or stock and bond portfolios to satisfy this requirement, often with a 20% or so “haircut” of the amount to account for the lower liquidity and value risk.

Property insurance

DSCR lenders will require that the property is properly insured against potential damage and destruction, typically at a minimum of the loan amount or replacement cost. This ensures that if the property is destroyed, the DSCR lender can recover the funds from the loan in a payout of no less than the principal balance. Flood insurance to this amount is also required if the property lies in a federally designated flood zone.

Leases

If the property is leased as a long-term rental, copies of the leases are required to be provided, and they must be in proper order (clearly signed with rents and terms fully clarified). One thing to watch out for is when purchasing a property that is currently leased out: things typically run the smoothest when the seller can provide these leases quickly.

Short-term rental history

If the property has been utilized as a short-term rental, the last 12 months of bookings and receipts are typically required by the DSCR lender. Usually, these can be downloaded and sent fairly easily from short-term rental platforms such as Airbnb and VRBO.

Entity documents

These are not applicable if you are borrowing as an individual but are required if, like many investors, you choose to set up an LLC. For borrowers who go this route, a few documents are typically required. It will often depend on the state of incorporation.

Typical entity documents required by DSCR lenders include:

Certificates of Good Standing

Certificate of Formation

Articles of Organization

Operating Agreement

Renovation documentation

For borrowers who follow the BRRRR method and use DSCR loans for a quick cash-out refinance, documentation of all the renovation work is often required. These will typically include receipts, invoices, and work orders from the rehab work on the property.

Conclusion

While there are a few more documents that go into the loan file, these are obtained by the DSCR lender and don’t have to be provided by the borrower. These include an appraisal, appraisal review, and title insurance.

Overall, DSCR loans are a great product because the documentation requirements are limited and reasonable, ensuring solid underwriting and protecting against risk and market meltdown while not being a hassle and nightmare of paperwork.

Construction Loans

Construction loans are short-term loans designed to fund the construction or renovation of residential or commercial properties. They provide borrowers with access to funds in stages as the project progresses, reducing the financial burden during construction. Once the construction is complete, these loans are typically converted into traditional mortgages, allowing borrowers to make principal and interest payments on the property.

Non-QM Loans

Non-QM (Non-Qualified Mortgage) loans are mortgage products that do not conform to the strict guidelines set by government-sponsored entities like Fannie Mae and Freddie Mac. These loans are typically designed for borrowers who may not meet traditional lending criteria, such as those with non-traditional income sources or credit issues. Non-QM loans offer flexibility in underwriting, making homeownership accessible to a broader range of individuals and providing options beyond standard conventional mortgages.

Bank Statement Loans

Bank Statement Loans offer a flexible solution for self-employed individuals or those with non-traditional income. Instead of tax returns, these loans use your bank deposits to verify income, making them ideal for small business owners and freelancers. With competitive rates, they provide a tailored path to homeownership.

Refinance Loans

Home Refinance Loans, also known as refinancing, involve replacing an existing mortgage with a new one, typically with different terms or interest rates. Borrowers often pursue refinancing to lower their monthly mortgage payments, reduce their interest rates, or access their home’s equity for other financial needs. Refinance options include rate-and-term refinances, which aim to secure better loan terms, and cash-out refinances, allowing homeowners to borrow against their home’s equity. The process usually involves a credit check, home appraisal, and evaluation of the borrower’s financial situation to determine eligibility and the potential benefits of refinancing.

In some cases a refinance loan might result in higher finance charges over the life of the loan.

What is Down Payment Assistance?

Down payment assistance (DPA) programs provide financial support to homebuyers who may struggle to come up with the required down payment for a home purchase. These programs can come in the form of grants, low- or no-interest loans, and tax credits. They are often provided by government agencies, non-profit organizations, or other institutions dedicated to promoting homeownership.

Types of Down Payment Assistance We Offer

Grants: Non-repayable funds that can be used towards your down payment or closing costs. These grants do not require repayment, making them an excellent option for qualified buyers.

Second Mortgage Loans: Low-interest or no-interest loans that must be repaid over time, usually after you move, sell, or refinance your home. These loans can significantly reduce your out-of-pocket expenses at the time of purchase.

Deferred Payment Loans: Loans that require no payment until you sell, refinance, or pay off your first mortgage. This option allows you to delay repayment and focus on building equity in your new home.

Forgivable Loans: Loans that are forgiven over a specific period, typically if you stay in your home for a certain number of years. If you meet the requirements, you won’t have to repay the loan.

Who Qualifies for Down Payment Assistance?

Eligibility for down payment assistance programs varies depending on the specific program and location. However, common qualifying factors include:

First-Time Homebuyers: Many programs are specifically designed for first-time buyers who meet certain income and purchase price limits.

Income Limits: Some programs have income restrictions to ensure they are helping those who need it most. Income limits vary by location and household size.

Property Type: Typically, the property must be your primary residence, and some programs may have restrictions on the type of home (e.g., single-family homes, condos).

Credit Requirements: While some programs are flexible, others may have minimum credit score requirements to qualify.

Foreign National Loans

Foreign national loans are mortgage loans specifically tailored for individuals who are not U.S. citizens or permanent residents but wish to purchase property in the United States. These loans are designed to provide access to U.S. real estate markets, offering financial options for foreign investors, expatriates, or individuals seeking vacation homes. Lenders typically require a higher down payment and may have more stringent credit and income verification requirements for foreign national borrowers. Foreign national loans can be an excellent way for non-U.S. residents to invest in U.S. real estate and diversify their portfolios.

Commercial Loans

Commercial loans are financial products designed to support businesses in various ways, including financing property acquisitions, expansion, or working capital needs. They typically offer more significant loan amounts and longer repayment terms compared to personal loans. Commercial loans can take several forms, such as real estate loans, equipment financing, or lines of credit, each tailored to the specific financial requirements and goals of the business.

Fix & Flip loans

Fix and flip loans are short-term financing options designed for real estate investors to purchase, renovate, and quickly sell a property for profit. Unlike traditional mortgages, which are for long-term residency, these loans are structured for speed and flexibility, focusing heavily on the property’s potential after-repair value (ARV).

How Fix and Flip Loans Work? The process typically involves:

Securing a Loan: An investor gets a loan to cover both the purchase price of a distressed property and the estimated renovation costs.

Renovation: The investor renovates the property using the funds, often dispersed through a “draw” schedule as work is completed and inspected.

Selling (Flipping): Once renovated, the property is put on the market and sold quickly.

Repayment: The proceeds from the sale are used to pay off the loan, with the remaining funds as profit.

Private/Hard Money

Private and hard money lending are types of asset-based financing provided by non-traditional sources, primarily used for real estate investments when quick funding is needed or traditional financing is unavailable. The terms are often used interchangeably, though some distinctions exist.

Key Characteristics

Asset-Based: The loan is primarily secured by the value of the real estate collateral (the “hard” asset), not the borrower’s creditworthiness or income history.

Source of Funds: The money comes from private individuals, small groups of investors, or professional lending companies, rather than conventional banks or institutional lenders.

Speed and Flexibility: The approval process is much faster than traditional loans, often closing in days or a couple of weeks, with more flexible terms.

Short Term: These are typically short-term bridge loans, with repayment periods ranging from six months to a few years (commonly 12-24 months).

Higher Cost: Due to the increased risk and speed, interest rates (typically 8% to 15%) and upfront fees (points) are significantly higher than conventional mortgages.

Interest-Only Payments: Many loans are structured with interest-only monthly payments, with a large balloon payment of the principal due at the end of the term.

Primary Uses

Hard and private money loans are most commonly used by real estate investors for business purposes, such as:

Fix-and-flips: Purchasing and renovating distressed properties to sell quickly for a profit.

Bridge Financing: Covering the gap when an investor needs to close on a new property before selling an existing one.

Quick Acquisitions: Securing a property quickly in a competitive market where waiting for traditional financing would mean losing the deal.

Working with Credit Issues: An option for borrowers who may not qualify for conventional loans due to credit history or income documentation issues.