alternative Income - Case scenarios

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A borrower is 75% owner of a marketing company that places "sales-carts"  in local malls. The business has been in existence for over two years.  The borrower's small company sells seasonal items. There are two employees plus the borrower.  The borrower presented 12 months of business bank statements.  A review of  the deposits showed $38,000 as average monthly deposits.  As a "service" based business with 2 employees', the borrower likely has a 40% business expense ratio. When we factor the 75% ownership and 40% expense ratio, the borrower presents $17,100 in usable monthly income.  

No Tax Returns, Paystubs or W2's are required.

A key metric in loan approval is the borrower's debt-to-income ratio (DTI).  The DTI is determined by dividing the borrower's monthly debt expenditures plus housing expenses into the gross income.  After a review of the borrower's income, it is determined that the borrower's debt-to-income (DTI) is over 50%.  In order to reduce the debt-to-income, we can use the borrower's liquid assets, amortized over 60 months, to layer in additional income.    

A very useful loan product for seasoned property investors, is a Debt-Service loan, where the rental income for the property is the only income used to qualify for the loan.  

John is a seasoned investor. He is conducting a home improvement, cash-out refinance on his investment property.  John is choosing to use the debt-service loan, where the new mortgage payment is less than the rent he is collecting.   This loan requires no personal income, not tax returns,  paystubs or W2s.  John is borrowing up to 75% of the homes value and receiving back cash needed for home improvement.