Real Estate Community Forum

I've heard that because of the credit crunch many lenders have tightened their underwriting standards. What documentation is now being asked for people who are self-employed? What if I haven't been in business for 2 years? Am I out of luck or just not talking to the right lenders?

-Kevin

You're right, credit standards are significantly more robust and strict compared to just a few short months ago.

Your individual situation depends on several factors...income, credit score, work history, assets etc.

Being a business owner myself, I know that tax returns don't accurately reflect my ability to repay a loan. If that's the case with you, you may have to go with a "stated" loan program, where you state your income to the lender instead of documenting with tax returns, pay stubs etc.

NINA and to some extent SISA loans have largely fallen by the wayside due to market conditions. SIVA programs are still around...but the guidelines are stringent

For a stated loan today, you generally need a credit score higher than 680-700, a loan to value ration of 90% or less, a decent amount of assets so that you have at least 6 months worth of reserve funds to pay your total debt obligations.

Most lenders sell mortgage loans on the secondary market, therefore must abide by the guidelines set by the secondary market investors. You may have better luck with a bank where you do your business banking. Since your bank will already be aware of your financial situation, they may be able and willing to make an exception to the secondary market guidelines and keep your mortgage loan as a part of their lending portfolio.