No Income Verification Florida Investor Home Equity Line Of Credit – DSCR HELOC –
Key Features:
- 1st lien HELOC
- Purchase / Cash-Out options
- Minimum Credit Score: 700
- Loan-to-Value (LTV) / Combined Loan-to-Value (CLTV) up to 75%
- Maximum Loan Amount: $500,000
- Minimum Debt Service Coverage Ratio (DSCR): 1.00
- First-time investors eligible
- 30-years variable term with 3-year draw period
- No prepayment penalties
- No income documentation required
- Short-term rental income accepted
Your Florida rental income becomes your golden ticket to a revolving line of credit..
- DSCR is the ratio of the property’s rental income and the Principal, Interest, Taxes, Insurance, and Association due (PITIA) payment.
- HELOC refers to Home Equity Line of Credit.
- Being High Risk Loans, Non-QM loans may include higher interest rates, closing costs, interest-only periods, or prepayment penalties.
Home Equity Line of Credit (HELOC) DSCR Program
Product code
Product Code Product description HELOC DSCR Program
Loan Purpose • Cash out • Purchase
Transaction
type • Standalone 1st lien position
Occupancy
• Investment properties – Business purpose loan
States – Florida Helock Investor loans
Amortization types • 30-years variable term with 3-year draw period with 3 years I/O
Qualifying Payments • Margin + Index Rate limits Minimum payment during draw period Life cap Life floor WSJ Prime rate index plus a margin as per rate sheet 18% 6% I/O calculation, greater of interest amount or $100 Amortized P&I payment based upon the total line amount, repayment term, current rate (Index + margin)
Draw requirement
Initial Draw:
• Initial Draw: Minimum 75% of the total credit limit
• Initial Draw for Purchase: 100% of the total loan amount.
• Additional Draw guidelines:
o A minimum of $1,000 does not exceed the loan amount limit.
o Unlimited draws are allowed during the draw period
Eligible Borrowers
• US Citizen
• Permanent Resident Alien
• Non-permanent Resident Alien
Ineligible borrowers
Borrowers who are party to a lawsuit are ineligible
• First time homebuyer
• Foreign National
• ITIN borrower
• Irrevocable Trust
• Land Trust
• Blind Trust
• Persons with Diplomatic Immunity, as defined by US Citizenship and Immigration Services
• Persons from OFAC sanctioned countries and persons sanctioned by OFAC
• Not-For-Profit entity
Maximum
number of
borrowers • The maximum number of borrowers allowed per loan is four (4).
Experienced
Investor
• An experienced investor is an individual borrower who has a history of owning and managing
commercial or non-owner occupied residential real estate for at least 12 months anytime during
the most recent 12-month period.
• For files with more than one borrower, only one borrower must meet the definition.
• Ownership history must be documented for other Real Estate Owned (REO) with one of the
following:
o Mortgage history on credit report.
o Property profile report
o Other 3rd party documentation (e.g. Fraud Guard, Settlement Statement, Closing
Disclosure).
First Time
Investor
• First-Time Investor is a borrower not meeting the Experienced Investor definition, but who
currently owns a primary residence for at least one (1) year.
• LTV/CLTV must be reduced by 5%.
• Ownership history must be documented for primary residence with one of the following:
o Mortgage history on credit report.
o Property profile report
o Other 3rd party documentation (e.g. Fraud Guard, Settlement Statement, Closing
Disclosure).
Vesting
allowed
• Ownership must be fee simple.
• Acceptable forms of vesting are:
o Individuals
o Joint tenants
o Tenants in common
o Inter Vivos revocable Trust.
o Entity – LLC, Corporation, or Partnership
Eligible
Properties
• Single Family residence [1-unit]
• 2-4 units
• PUD
• Warrantable Condominium
• Site Condo
Ineligible
properties
• Leasehold
• AG Zoning
• Deed or Resale Restricted Properties
• Non-warrantable condominium
• Manufactured Home
• Condotel
Compliance • No section 32 or state High-cost loans are allowed
• Loans must comply with all applicable Federal and State regulations
Underwriting
• Refer to the Fannie Mae Selling Guide for any topic not specifically addressed herein
Prepayment
penalty • No prepayment penalty
Approval type
• Manual underwritten loans
Minimum
Credit score • 700
• Minimum 2 credit score required for all the borrowers
Non-traditional
credit • Not allowed
Maximum Debt
to income ratio • Not applicable
Minimum DSCR
• 1.00
Minimum Loan
Amount • $50,000
Maximum
Combined Lien
amount (1st
+2nd lien)
• $3,000,000
Eligibility
Matrix LTV/CLTV matrix for 1st lien HELOC
Maximum Loan amount FICO LTV/CLTV
$50,000 to $500,000 720 75%
700 70%
• Additional restrictions:
1. 2-4 units and Warrantable condominium: LTV/CLTV must be reduced by 5%
2. First Time investor: LTV/CLTV must be reduced by 5%
Declining
Markets • LTV/CLTV must be reduced by 5% if appraisal indicates the property is located within a declining
market.
Minimum
Tradeline
Requirement
Transaction Tradeline requirement
All Transactions
Any of the below is required to be met:
• 3 trade lines reporting for a minimum of 12 months with
activity in the last 12 months.
• 2 tradelines reporting for a minimum of 24 months all
with activity in the last 12 months.
• All borrower and guarantors must meet the minimum tradeline requirements as per below:
• The following are not valid tradelines:
o Liabilities in Deferment status
o Account discharged through bankruptcy
o Authorized user account
o Charge offs
o Collection accounts
o Foreclosures
o Deed in lieu foreclosure
o Short Sales
o Pre-closures sales
Housing or
Mortgage Lates
• The 12 months mortgage history on both the borrower’s primary residence and the subject
property [if subject property is a refinance transaction] are required.
• Any mortgage reported on the credit report for any property owned by the borrower needs to
be included in the housing history requirements.
• No 30 days late allowed in the last 12 months on all mortgages for all the borrowers.
Verification of
Mortgage
(VOM)
completed by a
private party
• Any VOM completed by a private party, or interested party must require most recent 6 months
of cancelled checks or bank statements on the loan
Evidence of
Primary
Residence
• All borrowers and guarantors must maintain a primary residence. Evidence of primary
occupancy is required.
Primary residence ownership status Documentation requirement
Primary residence owned by the borrower Proof of ownership of a primary home
superior in value and/or appeal to subject
•
Collection or
charge-offs • Follow FNMA guidelines for collection and charge-offs
Lawsuits • If the application, title or credit documents reflect that the borrower is involved in a lawsuit or
litigation, the borrower is not eligible.
Judgment /
Tax Lien • All open judgments, garnishments, and all outstanding liens must be paid off prior to or at
loan closing
Housing events
Housing events Waiting Period
Foreclosure, short-sale, deed in lieu,
bankruptcy
48 months
Multiple Events [Foreclosure, short-sale,
deed in lieu, bankruptcy]
84 months
Forbearance, Modification, Deferral 24-months of consecutive payments since
exiting plan
Notes:
• Bankruptcy must be measured from the discharge/dismissal date to the Note date.
• Foreclosure, short-sale, deed in lieu must be measured from the settlement/deed date
to the Note date.
• In the case of a foreclosure/ short sale/deed-in-lieu, which was included in a
bankruptcy, the seasoning timeline will start from the earlier of the date of discharge
of bankruptcy and short sale/deed-in-lieu/foreclosure completion date.
Seasoning
requirement
for cash out
refinance
• The borrower must own the property for more than 6 months verified till the application date.
• Less than or equal to 6 months seasoning since previous refinance is not eligible.
Solar Liens
• Anything that will include a UCC filing associated with the property and/or will create an
easement on title is ineligible.
Land
contract/contr
act for deed • Paying off land contract or contract for deed is not acceptable.
Income
documentation
type allowed • No income documentation required.
Debt Service
Coverage Ratio
(DSCR)
Documentation
• Long Term rental documentation:
o FNMA Form 1007 or 1025 reflects long-term market rents.
o Executed Lease agreement.
o If any unit is vacant or unleased then LTV/CLTV must be reduced by 5%.
• Short-term rental (e.g., Airbnb, VRBO, Flip Key) documentation:
o A 5% LTV reduction applies to all transactions using short-term rental income.
o FNMA Form 1007 or 1025 reflecting short-term market rents.
o The most recent 24-month bank statements from the borrower evidence short-term
rental deposits. The borrower must provide rental records for the subject property to
support monthly deposits.
o Gross rents must be reduced by 20% to reflect extraordinary costs (i.e., advertising,
furnishings, cleaning) associated with operating short-term rental property.
Debt Service
Coverage Ratio
(DSCR)
Calculation
• DSCR is defined as ratio of the qualifying subject property rent and PITIA of the 1st [if applicable]
and 2nd lien mortgage.
• Gross rents divided by PITIA = DSCR.
• Long term gross rental income calculation:
▪ Monthly Gross Rents are determined by using the actual lease amount or estimated market
rent from 1007/1025 as per below:
o Lower of executed lease agreement or market rents provided in 1007/1025.
o Reduce qualifying rents by any vendor or management fee reflected on appraisal report.
• Short term gross rental income calculation:
▪ Monthly Gross Rents are determined by using the following:
[(24 months deposits * 0.80) / 24 months] – (Vendor or Management fee as per appraisal)
Please note: If there are months when the property is vacant, use zero for that month in the
average.
Lease
requirements
• An executed lease with no less than 3 months remaining at the time of closing is required for
all units on the subject property if it is rented
• Monthly lease payments must be consistent with market rents.
• The Property must not and cannot be occupied by a borrower, any member of the borrower’s
LLC, or any family member.
• Month-to-month leases are allowed if all the below requirements are met:
o 12 months have been completed since the initial lease term.
o The lease agreement includes a month-to-month clause.
o Proof of rent must be provided for at least 3 consecutive months prior to note date.
o Proof of receipt of security deposit is required for the new lease agreement.
Assets
• Most recent one-month bank statement is required on the loan.
Reserve
• 6 months reserve required
Recently listed
for sale for
cash out
refinance
• The subject property must be taken off the market on or before the application date.
Fraud guard
• Required for all the borrowers
Non-Arm’s
Length
Transaction • Not allowed
Secondary/Sub
ordinate
financing
• Secondary or Subordinate Financing is allowed.
• Subordinate financing is subject to the following:
o Subordinate financing must be recorded and clearly subordinated to the new
mortgage.
o Maximum CLTV is equal to maximum LTV.
o Seller-held subordinate liens are not permitted.
o Negative amortization is not allowed.
o Private party secondary financing not allowed
o Subordinate liens can be paid off through closing
• If the subordinate financing is being subordinated, the following is required:
o The repayment terms of the existing second lien.
o An unsigned copy of the subordination agreement prior to closing; and
o A copy of the executed subordination agreement at closing
Title policy
• ALTA, Jr ALTA, ALTA lite, ALTA Short Form – Lender’s policy
Power of
Attorney • Power of Attorney is acceptable. Follow FNMA guidelines for POA.
Appraisal
requirement
• Full Appraisal is required on the loan.
• Form 1007 Schedule of Rents is required.
• Transferred appraisal is acceptable.
• Secondary Valuation is not required.
• Below are not acceptable:
o Appraisal waivers are not acceptable.
o Appraisals with condition or quality ratings of C5 or C6 will not be eligible
Assumable
• Not allowed
Escrow • Not allowed
Age of the
documents
• The expiration dates are based on the Note date of the loan.
Documents Validity
Credit Documents 120 days
Asset Documents 60 days
Title report 60 days
Appraisal 120 days
Requirements
when vesting
in the name of
Entity
• Entity must be domiciled in a US state.
• Any business structure is limited to a maximum of four owners/ partners.
• Personal guaranties must be provided by all the owners of the entity.
• Each owner must complete the initial application (Form 1003)
Documentation
when vesting
in the name of
Entity
Limited Liability Company
• Entity Articles of Organization, Partnership, and Operating Agreements, if any
• Corporate documents that contain a list of owners along with titles
• Tax Identification Number (Employer Identification Number – EIN)
• Certificate of Good Standing or equivalent
• Certificate of Authorization for the person executing all documents on behalf of the Entity
• LLC Borrowing Certificate
• Receipt of the current year franchise tax payment or clear search or evidence the state does
not require a franchise tax payment.
Partnership
• Filed Partnership Certificate
• Partnership Agreement (and all amendments)
• Certificate of Good Standing
• Tax Identification Number (EIN)
• Limited partner consents (where required by partnership agreement)
• Receipt of the current year franchise tax payment or clear search or evidence the state does
not require a franchise tax payment.
Corporation
• Filed Certificate/Articles of Incorporation (and all amendments)
• By-Laws (and all amendments)
• Certificate of Good Standing
• Tax Identification Number (EIN)
• Borrowing Resolution/Corporate Resolution granting authority of signer to enter loan obligation.
• Receipt of current year franchise tax payment, clear search, or evidence the state does not
require a franchise tax payment.