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Updated over 1 year ago on . Most recent reply

User Stats

23
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19
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Brad Roche
  • Lender
  • Davidson, NC
19
Votes |
23
Posts

Using a No-Ratio Loan to buy a Primary Residence

Brad Roche
  • Lender
  • Davidson, NC
Posted

What is a no-ratio loan? Much like a DSCR loan for an investment property- a no ratio loan does not look at your Debt-to-income ratio (DTI). They are mainly focused on your credit score and cash reserves. This is a great loan option for non-traditional buyers who write off a lot of their income as a loss (i.e. Self-employed / Business Owners). As far as qualifying income when applying for a traditional mortgage- we can only use income that you pay taxes on.

Here are the requirements for our No-Ratio program- they may differ lender to lender but this can be used as a good base of knowledge to understand how a No-Ratio Loan works. Please talk to your lender about their No-Ratio requirements:

  • Occupancy Types:
    • Primary Residence
    • Second Homes
  • Eligible Property Types:
    • SFR, PUD, Townhouses, Condo's, Multi-Units, Modular, Rural, and Log Homes
  • Credit Score Minimum/Cash Reserve Requirements/Down Payment Requirements
    • 720+ / 24 Months Cash Reserves (PITIA*) / 20% Down
    • 680-719 / 18 Months Cash Reserves (PITIA*) / 25% Down
    • 660-679 / 12 Months Cash Reserves (PITIA*) / 35% Down

* PITIA is your monthly mortgage payment (Principle, Interest, Property Taxes, Home Insurance, and Association Fees

If Comparing No-Ratio and Conventional- you would go for Conventional 10/10 times if you can qualify. For No-Ratio Loans- the terms are not ideal but are a great alternative option for non-traditional borrowers and those who can not qualify Fannie Mae/Freddie Mac Loans.

business profile image
The Mortgage Planner.
5.0 stars
82 Reviews

Most Popular Reply

User Stats

23
Posts
19
Votes
Brad Roche
  • Lender
  • Davidson, NC
19
Votes |
23
Posts
Brad Roche
  • Lender
  • Davidson, NC
Replied
Quote from @Carlos Ptriawan:
Quote from @Brad Roche:

What is a no-ratio loan? Much like a DSCR loan for an investment property- a no ratio loan does not look at your Debt-to-income ratio (DTI). They are mainly focused on your credit score and cash reserves. This is a great loan option for non-traditional buyers who write off a lot of their income as a loss (i.e. Self-employed / Business Owners). As far as qualifying income when applying for a traditional mortgage- we can only use income that you pay taxes on.

Here are the requirements for our No-Ratio program- they may differ lender to lender but this can be used as a good base of knowledge to understand how a No-Ratio Loan works. Please talk to your lender about their No-Ratio requirements:

  • Occupancy Types:
    • Primary Residence
    • Second Homes
  • Eligible Property Types:
    • SFR, PUD, Townhouses, Condo's, Multi-Units, Modular, Rural, and Log Homes
  • Credit Score Minimum/Cash Reserve Requirements/Down Payment Requirements
    • 720+ / 24 Months Cash Reserves (PITIA*) / 20% Down
    • 680-719 / 18 Months Cash Reserves (PITIA*) / 25% Down
    • 660-679 / 12 Months Cash Reserves (PITIA*) / 35% Down

* PITIA is your monthly mortgage payment (Principle, Interest, Property Taxes, Home Insurance, and Association Fees

If Comparing No-Ratio and Conventional- you would go for Conventional 10/10 times if you can qualify. For No-Ratio Loans- the terms are not ideal but are a great alternative option for non-traditional borrowers and those who can not qualify Fannie Mae/Freddie Mac Loans.


 It's interesting but how do you spread the risk for investor of this fund ? Is it based on PRIME rate ? what's the spread ? 
dont you think it's similar like subprime mortgage 2.0 ?

it is not for investors- it is a primary loan…it is based on credit scores and assets remaining after closing unlike a lot of the loans in 2008. 
business profile image
The Mortgage Planner.
5.0 stars
82 Reviews

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