Portfolio Lender needed to close on new construction n Sacramento

3 Replies

I'm close to closing on a new construction home in Sacramento but just found out that because my most recent job is 1099, my lender has instructed me that I will need a portfolio lender as I'm considered 'self-employed' now. I've only been working with at this job since November and he says they need a 2 year history. I've been freelance but receiving W2s from different payroll companies for many years. I have a good income (over 100k), 750-800ish credit score, and can put up to 25% down on the loan which is about $387k. I have been jumping through hoops to try to make this all work as I do have a lot of expenses and my job isn't exactly normal. I was having to put 25% down as my lender had problems making my debt to income ratio work and was financing the house as an investment property so the interest rate I was getting was 5.25%.

Any insight or advice would be great. 

Originally posted by @Mike Mollica :

I'm close to closing on a new construction home in Sacramento but just found out that because my most recent job is 1099, my lender has instructed me that I will need a portfolio lender as I'm considered 'self-employed' now. I've only been working with at this job since November and he says they need a 2 year history. I've been freelance but receiving W2s from different payroll companies for many years. I have a good income (over 100k), 750-800ish credit score, and can put up to 25% down on the loan which is about $387k. I have been jumping through hoops to try to make this all work as I do have a lot of expenses and my job isn't exactly normal. I was having to put 25% down as my lender had problems making my debt to income ratio work and was financing the house as an investment property so the interest rate I was getting was 5.25%.

Any insight or advice would be great. 

 What happened with that plan you mentioned at the end?

I agree with @Chris Mason . What happened with the 25% down as a non-owner occupied? Typically if you buy non-owner occupied and the property is vacant at the time of the purchase, the lender will get a rental comp. analysis as part of the appraisal. 

It will show what the market rents for your place should be, at that point the lender will take the market rents, subtract 25% and then subtract the PITI of the loan. If the number ends up as a positive number, it adds to your income, if it ends up as a negative number, it adds just that portion to your debt ratio. Most rental properties pencil out to very close to debt neutral as far a loan is concerned. That means, if your current debt ratio is 50% or lower without buying the home, then it should still be about 50% or lower after buying the home as a rental.

Fannie Mae will allow you do a 1 unit at 15% down payment, although you might consider a 20% down to avoid mortgage insurance and help lower your debt ratio. If that wont work, my company has investor products that will allow you to buy as a rental with 20% down payment, no employment or income is listed on the application and the only way debt ratio is considered is so long as the property will bring in enough rents to cover the PITI. Rents = PITI or more, then your good to go. I'm not licensed in CA but I feel confident that Chris has these same type of programs. I would set an appointment with him. If that doesn't work out, let me know and I will send you a referral for a loan officer in my company down your way?

You have a temporary problem getting the financing you need as an owner occupied home. You just need to get just over 1 year to as much as 2 years self employed and this is not a problem anymore at that point. 

My lender instructed me that being 'self-employed' for less than 2 years that Fannie Mae and Freddie Mac as well as all conventional loan options were now out and that a portfolio lender would be the only option to make the deal work. The original deal, 25% down on a conventional loan, is apparently no longer an option.

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