First Capital Trust Deeds closed this owner occupied mortgage using 12 months of business bank statements for a self-employed borrower with a beautiful oceanfront home in Washington state.
This is another one of the non-Qualified Mortgage (non-QM) loans that FCTD has originated over the past year. As we’ve noticed, non-QM loans have been an excellent option for FCTD’s typical borrower profile/persona:
- Self-Employed – mostly in real estate
- Rental Property Portfolio
- Builds or Flips Homes
- Year over year Tax Returns showing varying Adjusted Gross Income (AGI) from large income one year to paper losses the next
- Utilized hard money and private money loans extensively across their portfolio due to difficulty obtaining conventional financing
In our scenario on the ocean in Washington, the borrowers built custom and spec homes so their AGI one year was large when they sold several homes while the next year it was significantly lower due to lot acquisitions, permitting, and other investment into new projects that would sell in the upcoming year.
Being able to do an owner occupied mortgage using 12-months business bank statements allowed the borrowers to use 50% of their gross deposits as personal income. This way, it was pretty easy to determine income for qualifying ratios on the $476,000 loan at 75% Loan-To-Value (LTV).
In 2018 and beyond, FCTD expects to originate a large volume of non-QM loans for many of our past private money clients and new clients who fit the persona highlighted above. Non-QM loans will help many clients secure long-term financing on their personal residence as well as their long-term investment properties.