Real Estate Agent · Washington, D.C. · Member since 2018 · 70 posts · 27 votes
I'm a salaried employee for my company and have a standard w-2 for the majority of my income but in the last year i've started doing things on the side like the occasional wholesale deal or some remodeling work, both of which I get via paid cash or wire. For a lender (and the underwriter), what do I need to "verify" those other non-standard sources of income?
FYI - I have several properties already and have been through the standard mortgage/loan process several times with only my w-2 income in play so not looking for standard lending advice in that respect. I googled the subject above but can only find stuff related to standard income
Lender · PA · Member since 2019 · 533 posts · 461 votes
4y
Good Morning: Slaiman: If you are not reporting that income then it will not be accounted for in a full document loan. DSCR lenders do not care about your income. So long as you have a 650 or so credit score and the rent covers the principal interest taxes and insurance and condo fees than they will lend you the money. They do require 6 months cash reserve. Also the better the credit score and coverage ratio the better the rate and LTV. Good luck.
Real Estate Agent · Washington, D.C. · Member since 2018 · 70 posts · 27 votes
4y
Thanks Steven! I’m good on the DTI, I was more asking for the cash required to closed. If I have large deposits being made in recent months bank statements from the activities mentioned above I want to be able to explain them properly so they know where I’m getting the money from close. I should also mention it’s an investment property that I’m closing on.
Good Morning: Slaiman: If you are not reporting that income then it will not be accounted for in a full document loan. DSCR lenders do not care about your income. So long as you have a 650 or so credit score and the rent covers the principal interest taxes and insurance and condo fees than they will lend you the money. They do require 6 months cash reserve. Also the better the credit score and coverage ratio the better the rate and LTV. Good luck.
Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
4y
I've used 'Bank Statement' loans before. You provide the last 12 months bank statements and the lender credits you for a percentage of that as income. I think maybe 50%......
Lender · PA · Member since 2019 · 533 posts · 461 votes
4y
I get it. So long as you can source your funds on deposit as from legitimate sources they will not be questioned. A funding company does not care about sourcing. As long as it is in the LLC account at time of application and you sign a non laundering affidavit they are o.k. with the source.
Lender · Washington DC · Member since 2015 · 2k+ posts · 2k+ votes
4y
To use a bank statement loan you provide 1 3 12 or 24 months of one bank account, and we analyze the deposits. If you did not deposit the "cash" it cannot be used. Disclosing this means you need to file tax returns in the future lining up with the story as you will sign that it is your income.
Debt service ratio loans - you need large down payment to cover the whole payment vs what market rents are.
In both cases you need decent FICO as that is part of the rate/pricing, down payment, and large reserves. Most have no mortgage insurance, some bank statement programs allow 10% down.
I'm a salaried employee for my company and have a standard w-2 for the majority of my income but in the last year i've started doing things on the side like the occasional wholesale deal or some remodeling work, both of which I get via paid cash or wire. For a lender (and the underwriter), what do I need to "verify" those other non-standard sources of income?
FYI - I have several properties already and have been through the standard mortgage/loan process several times with only my w-2 income in play so not looking for standard lending advice in that respect. I googled the subject above but can only find stuff related to standard income
Any help is appreciated!
A DSCR loan, like others have said, is the way to go. You should be able to get a purchase at 80% loan to value, so the LTV isn't too bad and the rate will be in the 6-7% range with a couple of points. Not bad for a no income verification loan based on credit score and rents that can be done in an LLC or your personal name.